Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	10	units at $38	$380
Aug. 7	Purchase	20	units at $39	780
Dec. 11	Purchase	14	units at $41	574
		44	units	$1,734

There are 20 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

a.	First-in, first-out (FIFO)
b.	Last-in, first-out (LIFO)
c.	Weighted average cost

Answer 1

Ans. a	Periodic FIFO:
	Date	Units	Rate	Total
	11-Dec	14	$41.00	$574
	7-Aug	6	$39.00	$234
	Ending inventory	20		$808
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
Ans. b	Periodic LIFO:
	Date	Units	Rate	Total
	1-Jan	10	$38.00	$380
	7-Aug	10	$39.00	$390
	Ending inventory	20		$770
	*In LIFO method the units that have purchased last, are released the first one and ending inventory units
	remain from the first purchase.
Ans. C	Available for sale
	Date	Units	Rate	Total
	1-Jan	10	$38.00	$380
	7-Aug	20	$39.00	$780
	11-Dec	14	$41.00	$574
	Cost of goods available for sale	44		$1,734
	Weighted average cost:
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$1,734 / 44
	$39.41	per unit
	Ending inventory =   Average cost per unit * Ending inventory units
	$39.41 * 20
	$788