Question

Beginning inventory, purchases, and sales for an inventory item are as follows:

Purchases Cost of Goods Sold Inventory

Event Unit Cost Total Cost Unit Cost Total Cost Total Cost QTY Bought Qty sold Qty Unit Cost

Beginning Inventory 150 755

First Sale 120

First Purchase 400 785

Second Sale 200

Second Purchase 300 805

Sale 290

The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year

A. What is the total cost of ending inventory according to FIFO?

B. What is the cost of ending inventory according to LIFO?

C. What is the cost of ending inventory using weighted average cost. Round to the nearest dollar.

Answer 1

A. What is the total cost of ending inventory according to FIFO?

Answer is 240*805 =193200

Workings

FIFO Method
	Purchase			Cost of goods sold				Closing Stock
Particulars	Unit	Rate	Amount	Unit	Rate	Amount	Unit	Rate	Amount
Beg inventory							150	755	113250
First Sale				120	755	90600	30	755	22650
First Purchase	400	785	314000				30	755	22650
							400	785	314000
Second Sale				30	755	22650
				170	785	133450	230	785	180550
Second Purchase	300	805					230	785	180550
							300	805	241500
Sale				230	785	180550
				60	785	241500	240	805	193200

2

Answer is 187700

workings

LIFO Method
	Purchase			Cost of goods sold				Closing Stock
Particulars	Unit	Rate	Amount	Unit	Rate	Amount	Unit	Rate	Amount
Beg inventory							150	755	113250
First Sale				120	755	90600	30	755	22650
First Purchase	400	785	314000				30	755	22650
							400	785	314000
Second Sale				200	785	157000	30	755	22650
							200	785	157000
Second Purchase	300	805					30	755	22650
							200	785	157000
							300	805	241500
							30	755	22650
Sale							200	785	157000
				290	805	233450	10	805	8050
Total									187700

3

Answer is 190898.99

weighted average
	Purchase			Cost of goods sold				Closing Stock
Particulars	Unit	Rate	Amount	Unit	Rate	Amount	Unit	Rate	Amount
Beg inventory							150	755.00	113250.00
First Sale				120	755	90600	30	755.00	22650.00
First Purchase	400	785	314000				30	755.00	22650.00
							400	785.00	314000.00
Total							430	782.91	336650.00
Second Sale				200	782.91	156581.	230	782.91	180068.60
Second Purchase	300	805	241500				230		180068.60
							300	0.00	241500.00
Total							530	795.41	421568.60
Sale				290	79	230669.6		795.41	190898.99