Question

9.

Periodic Inventory System and Inventory Costing Methods

Portia's Parts Shop recorded the following purchases and sales during the past year:

Jan.	1	Beginning inventory	125		cases @ $23	$ 2,875
Feb.	25	Purchase	100		cases @ $26	2,600
June	15	Purchase	200		cases @ $28	5,600
Oct.	15	Purchase	150		cases @ $28	4,200
Dec.	15	Purchase	100		cases @ $30	3,000
Goods available for sale			675			$18,275
Total sales			500		cases
Dec.	31	Ending inventory	175		cases

Assume for the specific identification method that the company sold all of the June 15 purchase and 100 cases each from the January 1 beginning inventory, the October 15 purchase, and the December 15 purchase.

Determine the costs that should be assigned to ending inventory and cost of goods sold according to the periodic inventory method under each of the assumptions that follow.

Costs are assigned by the specific identification method.

Cost of goods sold:	$
Ending inventory:	$

Costs are assigned by the average-cost method. In your calculations round average unit cost to the nearest dollar.

Cost of goods sold:	$
Ending inventory:	$

Costs are assigned by the FIFO method.

Cost of goods sold:	$
Ending inventory:	$

Costs are assigned by the LIFO method.

Cost of goods sold:	$
Ending inventory:	$

Answer 1

1	Average cost
		Units	Amount
	Cost of goods available for sale	675	18275
	Average cost per unit	27.07
		(18275/675)
	Ending inventory	175
	Average cost per unit	27.07
	Total inventory cost	4738
	Cost of goods available for sale	18275
Less	Ending inventory	4738
	Cost of goods sold	13537
2	Specific identification
	Ending inventory	Units	Per unit cost	Amount
	Jan 1inventory	25	23	575
	Feb 25 purchase	100	26	2600
	October 15 purchase	50	28	1400
	Total	175		4575
	Cost of goods available for sale	18275
Less	Ending inventory	4575
	Cost of goods sold	13700
3	FIFO
	Ending inventory	Units	Per unit cost	Amount
	October 15 purchase	75	28	2100
	December 15 purchase	100	30	3000
	Total	175		5100
	Cost of goods available for sale	18275
Less	Ending inventory	5100
	Cost of goods sold	13175
4	LIFO
	Ending inventory	Units	Per unit cost	Amount
	Jan 1inventory	125	23	2875
	Feb 25 purchase	50	26	1300
	Total	175		4175
	Cost of goods available for sale	18275
Less	Ending inventory	4175
	Cost of goods sold	14100
		specific	Average	FIFO	LIFO
	Ending inventory	4575	4738	5100	4175
	Cost of goods sold	13700	13537	13175	14100
	Cost of goods available for sale	18275	18275	18275	18275