Question

1. Below are the following inventory transactions for Deuce Hardware:

		Units	Unit Cost
Jan 1	Inventory	200	$ 2.50
Mar 28	Purchase	500	$ 2.60
May 15	Purchase	300	$ 2.50
July 27	Purchase	200	$ 2.80
Sep 30	Purchase	400	$ 3.00
Dec 15	Purchase	200	$ 3.20

During the year, 1,100 units were sold at $6 each. The company uses the periodic inventory system.

Calculate Ending Inventory and Cost of Goods Sold under each of the following:

1. Average Cost
2. FIFO
3. LIFO

2. Below are the following inventory transactions for Pinkman Chemical:

		Units	Unit Cost
Jan 1	Inventory	4000	$ 30.50
June 1	Purchase	3000	$ 32.00
Sep 1	Purchase	6000	$ 36.00
Dec 1	Purchase	3000	$ 34.00

During the year, 11,000 units were sold at $100 each. The company uses the periodic inventory system.

Calculate Ending Inventory and Cost of Goods Sold under each of the following:

1. Average Cost
2. FIFO
3. LIFO

Answer 1

Correct Answer:

Requirement 1:

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$    2,830	$    3,150	$    1,925
Cost of Ending Inventory	$    2,120	$    1,800	$    3,025

Working:

Weighted Average Cost Per unit
Total Units avaiable for sale		(A)	1800
Total Cost od units available for sale		(B)	$    4,950
Average Cost		(C=B/A)	$    2.750

	FIFO
A	Total Units Available for sale			1800			$         4,950
	Units Sold			1100
	Ending Inventory Units			700
	Valuation
	Cost of Goods Sold		200		$       2.50		$             500
			500		$       2.60		$         1,300
			300		$       2.50		$             750
			100		$       2.80		$             280
							$                -
							$                -
B	Cost of Goods Sold		1100	units			$         2,830
A-B	Ending Inventory		700	units			$         2,120

LIFO
A	Total Units Available for sale			1800			$         4,950
	Units Sold			1100
	Ending Inventory Units			700
	Valuation
	Cost of Goods Sold		200		$       3.20		$             640
			400		$       3.00		$         1,200
			200		$       2.80		$             560
			300		$       2.50		$             750
							$                -
B	Cost of Goods Sold		1100	units			3150
A-B	Ending Inventory		700	units			$         1,800

Weighted Average
A	Total Units Available for sale			1800			$   4,950.00
	Units Sold			1100
	Ending Inventory Units			700
	Valuation
	Cost of Goods Sold		700		$ 2.7500		$   1,925.00
B	Cost of Goods Sold		700	units			$   1,925.00
A-B	Ending Inventory		700	units			$   3,025.00

Requirement 2:

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$ 3,62,000	$ 3,82,000	$     3,68,500
Cost of Ending Inventory	$ 1,74,000	$ 1,54,000	$     1,67,500

Working:

Weighted Average Cost Per unit
Units units available for sale		(A)	16000
Total Cost of units available for sale		(B)	$ 5,36,000
Average Cost		(C=B/A)	$      33.50

LIFO
A	Total Units Available for sale			16000			$          5,36,000
	Units Sold			11000
	Ending Inventory Units			5000
	Valuation
	Cost of Goods Sold		3000		$           34.00		$          1,02,000
			6000		$           36.00		$          2,16,000
			2000		$           32.00		$              64,000
B	Cost of Goods Sold		11000	units			382000
A-B	Ending Inventory		5000	units			$          1,54,000

Weighted Average
A	Total Units Available for sale			16000			$          5,36,000
	Units Sold			11000
	Ending Inventory Units			5000
	Valuation
	Cost of Goods Sold		11000		$      33.50		$          3,68,500
B	Cost of Goods Sold		11000	units			$          3,68,500
A-B	Ending Inventory		5000	units			$          1,67,500

Note: i was unable to post all the working because the maximum limit of words was reached.

End of Answer.

Thanks