Question

1. Given the following information, you have been requested by your supervisor to submit the cost of ending inventory under LIFO periodic. At year-end 850 units remained in inventory.

January 1 inventory: 2,500 at $2.95

April 9: 4,000 at $4.00
June 15: 1,000 at $6.50
August 10: 500 at $7.00
December 9: 200 at $8.50

2.

Given the following information, you have been requested by your supervisor to submit the cost of ending inventory under Weighted-Average periodic. At year-end 850 units remained in inventory (round the answer to whole dollar).

January 1 inventory: 2,500 at $2.95
April 9: 4,000 at $4.00
June 15: 1,000 at $6.50
August 10: 500 at $7.00
December 9: 200 at $8.50

3.

Javon Corp. had a beginning inventory of 300 cans of paint on January 1, at a cost of $2,100. During the year, the following purchases were made:

February 15: 200 cans @ $8

May 5: 250 cans @ $10
December 8: 100 cans @ $12

By assuming 310 cans were left in inventory, what is the cost of ending inventory under the LIFO periodic method?

 

Answer 1

 

Question 1:

As per the LIFO periodic method, all the latest units will be sold first. Therefore, 850 units in ending inventory will comprise of the earliest/oldest units available with the company. In other words, the ending inventory of 850 units will belong to January 1 inventory.

The cost of ending inventory is arrived as below:

Cost of Ending Inventory (LIFO Periodic Method) = 850 Units (from January 1 Inventory)*2.95 (Cost Per Unit) = $2,508

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Question 2:

The value of ending inventory with the use of weighted average method (periodic) is determined as below:

Date	Units	Cost	Total Cost
Jan-01	2,500	2.95	7,375
Apr-09	4,000	4	16,000
Jun-15	1,000	6.5	6,500
Aug-10	500	7	3,500
Dec-09	200	8.5	1,700
Total	8,200		$35,075

Weighted Average Cost Per Unit = Total Cost/Total Units = 35,075/8,200 = $4.2774 per Unit

Cost of Ending Inventory (Weighted Average Periodic Method) = 850*4.2774 = $3,636

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Question 3:

As per the LIFO periodic method, all the latest units will be sold first. Therefore, 350 units in ending inventory will comprise of the earliest/oldest units available with the company. In other words, the ending inventory of 350 units include 300 units of January 1 inventory and 50 units of February 15 inventory.

The cost of ending inventory is arrived as below:

Cost of Ending Inventory (LIFO Periodic Method) = 300 (from January 1 Inventory)*(2,100/300) + 50 (from February 15 Inventory)*8 = $2,500