Question

Zippy Shoe Co. uses a periodic inventory system. Zippy purchased 415 pairs of shoes at $71 each in June, 980 pairs in August at $73 each, and 640 pairs in December at $76 each. Zippy sold 1,895 pairs of shoes during the year.

Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.

FIFO

LIFO

Weighted Average

Answer 1

Solution:

	FIFO	LIFO	Weighted average
Cost of goods sold	$139,005	$139,705	$139,349.40
Cost of Ending inventory	$10,640	$9,940	$10,295.60

Workings:

	Units	Cost per unit	Value
Beginning Balance			$0
Purchases
	415	$71	$29,465
	980	$73	$71,540
	640	$76	$48,640
Total	2,035		$149,645

.

Average Cost of Inventory
Units	(A)	2,035
Total Cost	(B)	$149,645
Average Cost	(C=B/A)	$73.54

FIFO
Total Units Available for sale		2,035
Units Sold		1,895
Closing Stock in Units		140
Value of Ending Inventory	140	@	$76	$10,640
Cost of Goods sold		Purchase + Opening Stock - Closing Stock	$149,645 - $10,640	$139,005
LIFO
Total Units Available for sale		2,035
Units Sold		1,895
Closing Stock in Units		140
Vale of Ending Inventory	140	@	$71	$9,940
Cost of Goods sold		Purchase + Opening Stock - Closing Stock	$149,645 - $9,940	$139,705
Weighted Average method
Total Units Available for sale		2,035
Units Sold		1,895
Closing Stock in Units		140
Value of Ending Inventory	140	@	$73.54	$10,295.60
Cost of Goods sold	Purchase + Opening Stock - Closing Stock = $149,645-$10,295.60	$139,349.40

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