Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods

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

Jan. 1	Inventory	15	units at $4,000	$60,000
Aug. 7	Purchase	21	units at $4,600	96,600
Dec. 11	Purchase	18	units at $5,100	91,800
Available for sale		54	units	$248,400

There are 17 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method.

a.	First-in, first-out (FIFO) method
b.	Last-in, first-out (LIFO) method
c.	Weighted average cost method

Answer 1

Solution

	Cost of Ending inventory
FIFO	$           86,700
LIFO	$           69,200
Weighted average	$           78,200

Working

Average Cost of Inventory
Units	(A)	54
Total Cost	(B)	$ 248,400
Average Cost	(C=B/A)	$ 4,600.00

.

FIFO
Total Units Available for sale		54
Units Sold		37
Closing Stock in Units		17
Valuation
Ending Inventory	17	@	$       5,100.00	$ 86,700
Cost of Goods sold	248400 minus 86700			$   161,700.00
LIFO
Total Units Available for sale		54
Units Sold		37
Closing Stock in Units		17
Valuation
Ending Inventory	15	@	$       4,000.00	$ 60,000
	2	@	$       4,600.00	$ 9,200
Value Of Ending Inventory				$            69,200
Cost of Goods sold	248400 minus 69200			$         179,200
Weighted Average method
Total Units Available for sale		54
Units Sold		37
Closing Stock in Units		17
Valuation
Ending Inventory	17	@	$       4,600.00	$      78,200.00
Value Of Ending Inventory				$      78,200.00
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)	$   170,200.00