Question

Periodic inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows:

Jan. 1 Inventory 30 units at $128

Mar. 10 Purchase 50 units at $138

Aug. 30 Purchase 20 units at $144

Dec. 12 Purchase 100 units at $148

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Ending Inventory and Cost of Goods Sold

(FIFO)	Ending Inventory is ?	Cost of Goods Sold ?
Last-in, first-out (LIFO)	Ending Inventory is ?	Cost of Goods Sold ?
Weighted average cost	Ending Inventory is ?	Cost of Goods Sold ?

Answer 1

FIFO: Under the FIFO method, it is assumed that the goods purchased first are the goods sold first. So the ending inventory would represent the goods purchased later in point of time.
LIFO: Under the LIFO method, it is assumed that the goods purchased last are the goods sold first. So the ending inventory would represent the goods which are purchased first in point of time.
Weighted average: Under the weighted average cost method, weighted average cost per unit is found for units available for sale and the weighted average cost arrived is used to calculate ending inventory and cost of goods sold.