Question

Beginning inventory, purchases and sales data for T-shirts are as follows:

April 3	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:

1. FIFO
2. LIFO
3. Average cost

In your computations, round the average cost per unit to two decimal places and round your final answers to the nearest dollar.

	FIFO	LIFO	Average Cost
Cost of merchandise sold	$	$	$
Ending inventory	$	$	$

Answer 1

FIFO Method
Purchase					Cost of goods sold			Balance inventory
Particulars		No of unit	cost p.u	Cost	unit	cost p,u	Cost	unit	cost p.u	cost
4/4 inventory								24	10	240
11/4 purchase		26	12	312				24	10	240
								26	12	312
14/4 sale					24	10	240	14	12	168
					12	12	144
21/4 purchase		18	15	270				14	12	168
								18	15	270
20/4 sale					14	12	168	12	15	180
					6	15	90
Total					56			12
Cost of goods sold = 642
inventory at the end = 180
LIFO Method
Purchase					Cost of goods sold			Balance inventory
Particulars		No of unit	cost p.u	Cost	unit	cost p,u	Cost	unit	cost p.u	cost
04-Apr								24	10	240
11-Apr		26	12	312				24	10	240
								26	12	312
14-Apr					26	12	312	14	10	140
					10	10	100
21-Apr		18	15	270				14	10	140
								18	15	270
20-Apr					18	15	270	12	10	120
					2	10	20
total					56			12
Cost of goods sold = 702
inventory at the end = 120
Weighted average method
No of unit	Cost of goods available for sale	Cost per unit	cost of goods sold unit	Cost p.u	cost of goods sold	no of unit inventory at end	cost p.u	cost
24	240
26	312
18	270
68	822	12.088	56	12.088	676.928	12	12.088	145.056
Cost of goods sold = 676.928
Inventory at the end = 145.056