Question

Alternative Inventory Methods

Frate Company was formed on December 1, 2015, and uses the periodic inventory system. The following information is available from Frate's inventory records for Product Ply:

	Units			Unit Cost
January 1, 2016 (beginning inventory)	800			$ 9.00
Purchases:
January 6, 2016	1,500			10.00
January 25, 2016	1,200			10.50
February 17, 2016	600			11.00
March 27, 2016	900			11.50

A physical inventory on March 31, 2016 shows 1,600 units on hand.

Required:

For each method, enter your answers in chronological order.

Prepare schedules to compute the ending inventory at March 31, 2016, under each of the following inventory methods:
1. FIFO

FRATE COMPANY
Computation of Inventory for Product Ply Under FIFO Inventory Method
March 31, 2016
	Units	Unit cost	Total cost
March 27, 2016	______	$______	$______
February 17, 2016	______	_______	_______
January 25, 2016 (portion)	______	_______	_______
March 31, 2016 inventory	______	_______	$______

2. LIFO

FRATE COMPANY
Computation of Inventory for Product Ply Under LIFO Inventory Method
March 31, 2016
	Units	Unit cost	Total cost
Beginning inventory	_____	$______	$______
January 6, 2016 (portion)	______	_______	_______
March 31, 2016 inventory	______	_______	$_______

3. Weighted average (For the weighted average method, round the average cost per unit to two decimal places.)

FRATE COMPANY
Computation of Inventory for Product Ply Under Weighted Average Inventory Method
March 31, 2016
	Units	Unit cost	Total cost
Beginning inventory	______	$______	$______
January 6, 2016	______	_______	_______
January 25, 2016	______	_______	_______
February 17, 2016	______	_______	_______
March 27, 2016	______	_______	_______
Total	______		$______
Weighted average cost		$______
March 31, 2016 inventory	______	$______	$_______

Answer 1

		units	Rate $	$
	Jan 1 2016, Beginning inventory	800	9	7,200
	Purchases;
	6-Jan-16	1,500	10	15,000
	25-Jan-16	1,200	10.5	12,600
	17-Feb-16	600	11	6,600
	27-Mar-16	900	11.5	10,350
	Total	5,000		51,750
	Weighted Average cost per unit = $ 51,750 / 5,000 = $ 10.35 per unit
1	FIFO
	Total units sold = 5,000 units - 1,600 units = 3,400 units
	Cost of goods sold;
	( 800 units x $ 9 )	7,200
	( 1,500 units x $ 10)	15,000
	( 1,100 units x $ 10.50)	11,550
	Total cost of goods sold	33,750
	Ending Inventory;
	100 units x $ 10.50	1,050
	600 units x $ 11	6,600
	900 units x $ 11.50	10,350
	Total ending inventory ( 1,600 units)	18,000
2	LIFO
	Cost of goods sold;
	( 900 units x $ 11.50 )	10,350
	( 600 units x $ 11)	6,600
	( 1,200 units x $ 10.50)	12,600
	( 700 units x $ 10 )	7,000
	Total cost of goods sold	36,550
	Ending Inventory;
	800 units x $ 10	8,000
	800 units x $ 9	7,200
	Total ending inventory ( 1,600 units)	15,200
3	Weighted Average
	Cost of goods sold ( 3,400 units x $ 10.35)	35,190
	Ending inventory ( 1,600 units x $ 10.35)	16,560