Question

Periodic Inventory by Three Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 14 units @ $37 Feb. 17 Purchase 10 units @ $38 Jul. 21 Purchase 8 units @ $39 Nov. 23 Purchase 6 units @ $39 There are 19 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

Requirement a, band c

	Cost of Ending inventory
FIFO	$                     736
LIFO	$                     708
Weighted average	$                     722

Working

	Units	Cost per unit	value
Beginning Balance	14	$                   37.00	$ 518
Purchases
	10	$                   38.00	$ 380
	8	$                   39.00	$ 312
	6	$                   39.00	$ 234
Total	38		$ 1,444

.

Average Cost of Inventory
Units	(A)	38
Total Cost	(B)	$ 1,444
Average Cost	(C=B/A)	$                 38.000

.

FIFO
Total Units Avalable for sale		38
Units Sold		19
Closing Stock in Units		19
Valuation
Ending Inventory	14	@	$             39.00	$ 546
	5	@	$             38.00	$ 190
Value Of Ending Inventory				$                  736
Cost of Goods sold				$                  708
LIFO
Total Units Avalable for sale		38
Units Sold		19
Closing Stock in Units		19
Valuation
Ending Inventory	14	@	$             37.00	$ 518
	5	@	$             38.00	$ 190
Value Of Ending Inventory				$                  708
Cost of Goods sold				$                  736
Weighted Average method
Total Units Avalable for sale		38
Units Sold		19
Closing Stock in Units		19
Valuation
Ending Inventory	19	@	$           38.000	$                  722
Value Of Ending Inventory				$                  722
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$                  722