Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold

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

Jan. 1	Inventory	50 units @ $100
Mar. 10	Purchase	40 units @ $112
Aug. 30	Purchase	10 units @ $116
Dec. 12	Purchase	100 units @ $122

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method	Merchandise Inventory	Merchandise Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

Answer 1

			Qty	rate	Amt
	Jan. 1	Inventory	50	100	5000
	Mar. 10	Purchase	40	112	4480
	Aug. 30	Purchase	10	116	1160
	Dec. 12	Purchase	100	122	12200
	Cost of goods available for sales		200		22840
	Ending inventory =		80
	Unit sold=		120
	FIFO
	Merchandise Inventory =		80*122	9760
	Merchandise Sold=		22840-9760	13080
	LIFO
	Merchandise Inventory =		50*100+30*112	8360
	Merchandise Sold=		22840-8360	14480
	Weighted average cost
	Average cost = 22840/200			114.20
	Merchandise Inventory =		80*114.2	9136
	Merchandise Sold=		120*114.2	13704
	Cost of Merchandise Inventory and Cost of Merchandise Sold
	Inventory Method	Merchandise Inventory	Merchandise Sold
	First-in, first-out (FIFO)	9760	13080
	Last-in, first-out (LIFO)	8360	14480
	Weighted average cost	9136	13704