Question

Beginning inventory and purchases and sales data for T-shirts are as follows: Apr. 3   Beg. Inventory 24 units @ $10         11   Purchase 26 units @ $12         14   Sale 36 units         21   Purchase 18 units @ $15         25   Sale 20 units

Assuming the business maintains a periodic inventory system, calculate the cost of merchandise sold and ending inventory under the following assumptions:

a.  FIFO

b.  LIFO

c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Answer 1

a. FIFO Method

Purchase				Cost of goods sold			Balance
Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
03-Apr							24	$10.00	$240
11-Apr	26	12	312				24	10	240
							26	12	312
14-Apr				24	10	240
				12	12	144	14	12	168
21-Apr	18	15	270				14	12	168
							18	15	270
25-Apr				14	12	168
				6	15	90	12	15	180
Total				Cost of goods sold		$642	Ending inventory		$180

b. LIFO

Purchase				Cost of goods sold			Balance
Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
03-Apr							24	$10.00	$240
11-Apr	26	12	312				24	10	240
							26	12	312
14-Apr				26	12	312
				10	10	100	14	10	140
21-Apr	18	15	270				14	10	140
							18	15	270
25-Apr				18	15	270
				2	10	20	12	10	120
Total				Cost of goods sold		$702	Ending inventory		$120

c. Average Cost Method

Purchase				Cost of goods sold			Balance
Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
03-Apr							24	$10.00	$240
11-Apr	26	12	312				24	10	240
							26	12	312
							50	11.04	552
14-Apr				36	11.04	397	14	11.04	155
21-Apr	18	15	270				14	11.04	155
							18	15	270
							32	13.28	425
25-Apr				20	13.28	266
							12	13.28	159
Total				Cost of goods sold		$663	Ending inventory		$159