Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	50 units @ $120
Mar. 10	Purchase	60 units @ $130
Aug. 30	Purchase	20 units @ $138
Dec. 12	Purchase	70 units @ $144

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method	Merchandise Inventory	Merchandise Sold
a. First-in, first-out (FIFO)	$fill in the blank 1	$fill in the blank 2
b. Last-in, first-out (LIFO)	fill in the blank 3	fill in the blank 4
c. Weighted average cost	fill in the blank 5	fill in the blank 6

Answer 1

Solution

	Cost of Ending inventory	Cost of goods sold
FIFO	$           11,460	$                 15,180
LIFO	$              9,900	$                 16,740
Weighted average	$           10,656	$                 15,984

Working

	Units	Cost per unit	value
Beginning Balance	50	$                 120.00	$ 6,000
Purchases
	60	$                 130.00	$ 7,800
	20	$                 138.00	$ 2,760
	70	$                 144.00	$ 10,080
Cost of goods available for sale	200		$ 26,640

.

Average Cost of Inventory
Units	(A)	200
Total Cost	(B)	$ 26,640
Average Cost	(C=B/A)	$ 133.20

.

FIFO
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	70	@	$           144.00	$      10,080.00
	10	@	$           138.00	$        1,380.00
Value Of Ending Inventory				$      11,460.00
Cost of Goods sold	26640 minus 11460			$      15,180.00
LIFO
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	50	@	$           120.00	$ 6,000
	30	@	$           130.00	$ 3,900
Value Of Ending Inventory				$              9,900
Cost of Goods sold	26640 minus 9900			$            16,740
Weighted Average method
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	80	@	$           133.20	$            10,656
Value Of Ending Inventory				$            10,656
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)	$            15,984