Question

Periodic Inventory by Three Methods

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

Jan. 1	Inventory	2,500	units at $5
Feb. 17	Purchase	3,300	units at $6
July 21	Purchase	3,000	units at $7
Nov. 23	Purchase	1,200	units at $8

There are 1,500 units of the item in the physical inventory at December 31. The periodic inventory system is used.

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	2500	$5.00	$12,500	2500	$5.00	$12,500.00	0	$5.00	$0.00
Purchases:
17-Feb	3300	$6.00	$19,800	3300	$6.00	$19,800.00	0	$6.00	$0.00
21-Jul	3000	$7.00	$21,000	2700	$7.00	$18,900.00	300	$7.00	$2,100.00
23-Nov	1200	$8.00	$9,600	0	$8.00	$0.00	1200	$8.00	$9,600.00
Total	10000		$62,900	8500		$51,200.00	1500		$11,700.00

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	2500	$5.00	$12,500	1000	$5.00	$5,000.00	1500	$5.00	$7,500.00
Purchases:
17-Feb	3300	$6.00	$19,800	3300	$6.00	$19,800.00	0	$6.00	$0.00
21-Jul	3000	$7.00	$21,000	3000	$7.00	$21,000.00	0	$7.00	$0.00
23-Nov	1200	$8.00	$9,600	1200	$8.00	$9,600.00	0	$8.00	$0.00
Total	10000		$62,900	8500		$55,400.00	1500		$7,500.00

Solution c:

Computation of COGS and ending inventory - Periodic Weighted 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	2500	$5.00	$12,500
Purchases:
17-Feb	3300	$6.00	$19,800
21-Jul	3000	$7.00	$21,000
23-Nov	1200	$8.00	$9,600
Total	10000	$6.29	$62,900	8500	$6.29	$53,465	1500	$6.29	$9,435