Question

Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:

	Units	Unit Cost
Inventory, December 31, prior year	2,000		$	5
For the current year:
Purchase, March 21	6,000			4
Purchase, August 1	4,000			2
Inventory, December 31, current year	3,000

	FIFO	LIFO	AVERAGE COST
ENDING INVENTORY
COSTS OF GOODS SOLD

Answer 1

				units	unit cost	total
	inventory ,December 31			2,000	5	10000
	for the current year
	purchases ,march 21			6,000	4	24000
	purchase,august 1			4,000	2	8000
	total			12,000		42000
	Average cost per unit = 42000/12000
			3.5
	cost of goods sold = 12000 units - 3000 units
			9000 units
	Average cost
	ending inventory     = 3.5*3000
			10500
	cost of goods sold = 3.5*9000
			31500
	FIFO
	ending inventory = 3000*2=			6000
	cost of goods sold = 2000*5    +     6000*4    + 1000*2 =						36000
	LIFO
	ending inventory   =2000*5 + 1000*4 =					14,000
	cost of goods sold = 5000*4 + 4000*2 =					28,000
				FIFO	LIFO	Average
	Ending inventory			6,000	14,000	10,500
	cost of goods sold			36,000	28,000	31,500