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 @ $114 Mar. 10 Purchase 50 units @ $122 Aug. 30 Purchase 30 units @ $128 Dec. 12 Purchase 70 units @ $130 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.

Answer 1

LIFO

1) COGS: $14,360

Working:

50 units	@114	5700
50 units	@122	6100
20 units	@128	2560
120 units		14360

Jan. 1	Inventory 50 units @ $114
Mar. 10	Purchase 50 units @ $122
Aug. 30	Purchase 30 units @ $128
Dec. 12	Purchase 70 units @ $130
	80 units of the item in the physical inventory at December 31

Sales = (50+50+30+70) - 80 = 120 units

2) Ending inventory: $9,360

50 units	@114	5700
30 units	@122	3660
80 units		9360

?

FIFO:

1) COGS: $14,360

Working:

50 units	@114	5700
50 units	@122	6100
20 units	@128	2560
COGS		14360

2) Ending inventory: $10,380

Working:

70 units	@130	9100
10 units	@128	1280
		10380

?

Weighted average:

1) COGS: $14,844

Working:

50 units	@114	5700
50 units	@122	6100
30 units	@128	3840
70 units	@130	9100
200 units		24740

120 units: 24740 / 200 * 120 = 14,844

2) Ending inventory: $9,896

Working: 24,740 / 200 * 80 = 9,896