Question

1. Periodic Inventory by Three Methods

   Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:

   Purchases Invoices
   Model	Inventory, January 1		1st		2nd		3rd		Inventory Count, December 31
   A10	__		4 at	$ 39	4 at	$ 42	4 at	$ 45	5
   B15	8 at	$ 86	4 at	77	3 at	83	6 at	90	7
   E60	3 at	69	3 at	59	15 at	62	9 at	64	5
   G83	7 at	243	6 at	251	5 at	261	10 at	260	9
   J34	12 at	55	10 at	57	16 at	64	16 at	65	13
   M90	2 at	106	2 at	108	3 at	126	3 at	128	5
   Q70	5 at	153	4 at	163	4 at	168	7 at	173	8

   Required:

   1. Determine the cost of the inventory on December 31 by the The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.first-in, first-out method.

   If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.

   Dymac Appliances Cost of the Inventory-FIFO Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   A10
   B15
   B15
   E60
   G83
   J34
   M90
   M90
   Q70
   Q70
   Total				$

   2. Determine the cost of the inventory on December 31 by the A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.last-in, first-out method.

   If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the OLDEST units first.

   Dymac Appliances Cost of the Inventory-LIFO Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   A10
   B15
   E60
   E60
   G83
   G83
   J34
   J34
   M90
   M90
   M90
   Q70
   Q70
   Total				$

   3. Determine the cost of the inventory on December 31 by the weighted average cost method.

   Dymac Appliances Cost of the Inventory-Weighted Average Method December 31
   Model	Quantity		Unit Cost		Total Cost
   A10		$		$
   B15
   E60
   G83
   J34
   M90
   Q70
   Total				$

   4.

   • FIFO
   • LIFO
   would be preferred for income tax purposes in periods of rising prices

Answer 1

1.

Model	Quantity	Unit Cost	Total Cost
A10	4.00	45.00	180.00
A10	1.00	42.00	42.00
B15	6.00	90.00	540.00
B15	1.00	83.00	83.00
E60	5.00	64.00	320.00
G83	9.00	260.00	2,340.00
J34	13.00	65.00	845.00
M90	3.00	128.00	384.00
M90	2.00	126.00	252.00
Q70	7.00	173.00	1,211.00
Q70	1.00	168.00	168.00
Total			6,365.00

2.

Model	Quantity	Unit Cost	Total Cost
A10	4.00	39.00	156.00
A10	1.00	42.00	42.00
B15	7.00	86.00	602.00
E60	3.00	69.00	207.00
E60	2.00	59.00	118.00
G83	7.00	243.00	1,701.00
G83	2.00	251.00	502.00
J34	12.00	55.00	660.00
J34	1.00	57.00	57.00
M90	2.00	106.00	212.00
M90	2.00	108.00	216.00
M90	1.00	126.00	126.00
Q70	5.00	153.00	765.00
Q70	3.00	163.00	489.00
Total			5,853.00

3.

Model	Quantity	Unit Cost	Total Cost
A10	5.00	42.00	210.00
B15	7.00	85.00	595.00
E60	5.00	63.00	315.00
G83	9.00	254.00	2,286.00
J34	13.00	61.00	793.00
M90	5.00	119.00	595.00
Q70	8.00	165.00	1,320.00
Total	52.00		6,114.00

Working note :

Inv Jan 1	1st Purchase	2nd Purchase	3rd Purchase	Weighted Average
qty	Price	qty	Price	qty	Price	qty	Price	Total Qty	Total Amount	Average Price
		4.00	39.00	4.00	42.00	4.00	45.00	12.00	504.00	42.00
8.00	86.00	4.00	77.00	3.00	83.00	6.00	90.00	21.00	1,785.00	85.00
3.00	69.00	3.00	59.00	15.00	62.00	9.00	64.00	30.00	1,890.00	63.00
7.00	243.00	6.00	251.00	5.00	261.00	10.00	260.00	28.00	7,112.00	254.00
12.00	55.00	10.00	57.00	16.00	64.00	16.00	65.00	54.00	3,294.00	61.00
2.00	106.00	2.00	108.00	3.00	126.00	3.00	128.00	10.00	1,190.00	119.00
5.00	153.00	4.00	163.00	4.00	168.00	7.00	173.00	20.00	3,300.00	165.00

4.In period of rising prices, LIFO will method should be used for income tax purpose as cost of merchandise will be higher which means cost of goods is higher than others and so profit will be less.