Question

Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31, 2019, the accounting records provided the following information for a product:

	Units	Unit Cost
Inventory, December 31, 2018	1,940		$	8
For the year of 2019:
Purchase, March 21	6,030			7
Purchase, August 1	4,040			5
Inventory, December 31, 2019	2,920

(1) Compute ending inventory and cost of goods sold for the year of 2019 under FIFO method.

(2) Compute ending inventory and cost of goods sold for the year of 2019 under LIFO method.

(3) Compute ending inventory and cost of goods sold for the year of 2019 under average cost method.

Answer 1

		Units	Unit cost	$
	Inventory,December 31,2018	1,940	8	15,520
	Purchases, March 21,2019	6,030	7	42,210
	Purchases, August 1,2019	4,040	5	20,200
	Total	12,010		77,930
	Inventory,December 31,2019	2,920
1	Under FIFO Method	$
	Inventory,December 31,2019 ( 2,920 units x $ 5 )	14,600
	Cost of goods sold ( $ 77,930 – $ 14,600)	63,330
2	Under LIFO Method	$
	Inventory,December 31,2019 [( 1,940 units x $ 8)+ (980 units x $ 7)] (info:2920[Inventory, December 31, 2019] - 1940[Inventory, December 31, 2018] = 980 units)	22,380
	Cost of goods sold ( $ 77,930 – $ 22,380)	55,550
3	Under Average Cost Method	$
	Inventory,December 31,2019 {($ 77,930/12,010 units )x 2,920 units}	18,923
	Cost of goods sold ( $ 77,930 – $ 18,923)	59,007