Question

Perpetual Inventory Using Weighted Average

Beginning inventory, purchases, and sales for Meta-B1 are as follows:

July 1		Inventory	100 units at $400
12		Sale	70 units
23		Purchase	120 units at $450
26		Sale	110 units

a. Assuming a perpetual inventory system and using the weighted average method, determine the weighted average unit cost after the July 23 purchase.
$per unit

b. Assuming a perpetual inventory system and using the weighted average method, determine the cost of the merchandise sold on July 26.
$

c. Assuming a perpetual inventory system and using the weighted average method, determine the inventory on July 31.
$

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	14	units at $27	$378
Aug. 7	Purchase	19	units at $28	532
Dec. 11	Purchase	15	units at $29	435
		48	units	$1,345

There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

a.	First-in, first-out (FIFO)	$
b.	Last-in, first-out (LIFO)	$
c.	Weighted average cost	$

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales for Item ER27 are as follows:

August 1		Inventory	52 units @ $16
9		Sale	37 units
13		Purchase	58 units @ $19
28		Sale	23 units

Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 28 and (b) the inventory on August 31.

a. Cost of merchandise sold on August 28	$
b. Inventory on August 31	$

Answer 1

Q1.

				Weighted Average Method
	Purchase	Sale	Ending Inventory
DATE	units	Cost/Unit	Total	units	Cost/Unit	Total	units	Cost/Unit	Total
Beginning Inventory	100	$ 400.00	$ 40,000				100	$    400.00	$ 40,000
July 12				70	$    400.00	$       28,000	30	$    400.00	$ 12,000
July 23	120	$ 450.00	$ 54,000				150	$    440.00	$ 66,000
July 26				110	$    440.00	$ 48,400.00	40	$    440.00	$ 17,600
Ending				180		$ 76,400	40		$ 17,600

a. Weighted average unit cost: $440.

b. Cost of the merchandise sold: Beginning Inventory + Purchases - Ending Inventory =$40,000 + $54,000 - $17,600 = $76,400 ;

c. Ending Inventory: $17,600.

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Q2.

*Ending Inventory on July,31:

FIFO: [3 units * $28] + [15 units * $29] = $84+$435= $519.

LIFO: [4 units * $28] + [14 units * $27] = $112+$378= $490;

Weighted Average: [18 units * {$1,345/48 units} ] = 18 units * $28.02 = $504.375 = $504(R.O)

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Q3.

		FIFO
	Cost of Goods Available for Sale	Sales	Ending Inventory
DATE	units	Cost/Unit	Total	units	units	Cost/Unit	Total
Beginning Inventory	52	$       16.00	$           832		52	$       16.00	$           832
Aug 9				37	15	$       16.00	$           240
Aug 13	58	$       19.00	$       1,102		15	$       16.00	$           240
					58	$       19.00	$       1,102
Aug 28				23	-	$              -	$              -
					35	$       19.00	$           665
Ending					35		$ 665

a. Cost of merchandise sold= Beginning Inventory + Purchases - Ending Inventory = $832 + $1,102 - $665 = $1,269.

b. Ending Inventory = $665.

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