Question

The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at $41 Feb. 17 Purchase 12 units at $42 Jul. 21 Purchase 11 units at $45 Nov. 23 Purchase 8 units at $47 There are 10 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to one decimal and final answers to the nearest whole dollar, if required. a. Determine the inventory cost by the first-in, first-out method. $ b. Determine the inventory cost by the last-in, first-out method. $ c. Determine the inventory cost by the weighted average cost method. $

Answer 1

Solution a:

Computation of COGS and ending inventory - Periodic FIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	20	$41.00	$820	20	$41.00	$820.00
Purchases:
17-Feb	12	$42.00	$504	12	$42.00	$504.00
21-Jul	11	$45.00	$495	9	$45.00	$405.00	2	$45.00	$90.00
23-Nov	8	$47.00	$376				8	$47.00	$376.00
Total	51		$2,195	41		$1,729.00	10		$466.00

Solution b:

Computation of COGS and ending inventory - Periodic LIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	20	$41.00	$820	10	$41.00	$410	10	$41.00	$410.00
Purchases:
17-Feb	12	$42.00	$504	12	$42.00	$504
21-Jul	11	$45.00	$495	11	$45.00	$495
23-Nov	8	$47.00	$376	8	$47.00	$376
Total	51		$2,195	41		$1,785.00	10		$410.00

Solution c:

Computation of COGS and ending inventory - Periodic Average cost method
Particulars	Cost of goods available for sale			Cost of goods sold - Average cost			Ending Inventory - Average cost
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	20	$41.00	$820
Purchases:
17-Feb	12	$42.00	$504
21-Jul	11	$45.00	$495
23-Nov	8	$47.00	$376
Total	51	$43.0	$2,195	41	$43.0	$1,765	10	$43.0	$430