Question

In it’s first month of operations, Literacy for the literate opened a new bookstore and bough merchandise in the following order; (1) 150 units at $5.00 on January 1st, (2) 460 units at $6 on January 8, and (3) 760 units at $8.00 on January 29. Assume $915 units are on hand at the end of the month calculate the cost of goods available for sale, ending inventory and cost of goods sold under FIFO, LIFO, and weighted average. Periodic inventory. Can someone provide an solution and explain the answer to me. Thanks

Answer 1

Under periodic inventory , inventory balance at each date is not updated (Updated at end of every period)

Under FIFO ,units acquired first are sold first so ending inventory is left from latest purchase

Under LIFO ,unis acquired last are sold first so ending inventory is left from initial balance.

Under weighted average units are sold at average cost .

a)cost of goods available for sale = units purchased * unit cost

   =[150*5]+[460*6]+[760*8]

    = 750+ 2760+ 6080

    = 9590

2)

**uNits available for sale = 150+460+760= 1370

weighted average cost per unit =cost of goods available for sale /units available for sale

        = 9590/1370

           = $ 7 per unit

Ending inventory :

Ending inventory		FIFO	LIFO	Weighted average
Jan1			150*5=750
jan 8		(915-760)*6=930	460*6=2760
Jan 29		760*8=6080	(915-150-460)=305*8=2440
cost of ending inventory		7010	5950	915*7= 6405

3)cost of goods sold:

	FIFO	LIFO	Weighted average
cost of goods available for sale	9590	9590	9590
less:ending inventory	(7010)	(5950)	(6405)
cost of goods sold	2580	3640	3185