Question

Periodic Inventory by Three Methods

Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:

Purchases Invoices
Model	Inventory, January 1		1st		2nd		3rd		Inventory Count, December 31
A10	__		4 at	$ 64	4 at	$ 70	4 at	$ 76	6
B15	8 at	$ 176	4 at	158	3 at	170	6 at	184	8
E60	3 at	75	3 at	65	15 at	68	9 at	70	5
G83	7 at	242	6 at	250	5 at	260	10 at	259	9
J34	12 at	240	10 at	246	16 at	267	16 at	270	15
M90	2 at	108	2 at	110	3 at	128	3 at	130	5
Q70	5 at	160	4 at	170	4 at	175	7 at	180	8

Required:

1. Determine the cost of the inventory on December 31 by the first-in, first-out method.

If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.

Dymac Appliances Cost of the Inventory-FIFO Method December 31
Model	Quantity		Unit Cost		Total Cost
A10		$		$
A10
B15
B15
E60
G83
J34
M90
M90
Q70
Q70
Total				$

2. Determine the cost of the inventory on December 31 by the last-in, first-out method.

If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the OLDEST units first.

Dymac Appliances Cost of the Inventory-LIFO Method December 31
Model	Quantity		Unit Cost		Total Cost
A10		$		$
A10
B15
E60
E60
G83
G83
J34
J34
M90
M90
M90
Q70
Q70
Total				$

3. Determine the cost of the inventory on December 31 by the weighted average cost method.

Dymac Appliances Cost of the Inventory-Weighted Average Method December 31
Model	Quantity		Unit Cost		Total Cost
A10		$		$
B15
E60
G83
J34
M90
Q70
Total				$

4.   would be preferred for income tax purposes in periods of rising prices.

Answer 1

Ans : 1.

DYMAC APPLIANCES

COST OF THE INVENTORY -FIFO METHOD

DEC 31

MODEL QTY UNIT COST TOTAL COST

A-10 4 76 304

A-10 2 70 140

B-15 6 184 1104

B-15 2 340 340

E-60 5 70 350

G-83 9 259 2331

J-34 15 270 4050

M-90 3 130 390

M-90 2 128 256

Q-70 7 180 1260

Q-70 1 175 175

2.

DYMAC APPLIANCES

COST OF THE INVENTORY -LIFO METHOD

DEC 31

MODEL QTY UNIT COST TOTAL COST

A-10 4 64 256

A-10 2 70 140

B-15 8 176 1408

E-60 3 75 225

E-60 2 65 130

G-83 7 242 1694

G-83 2 250 500

J-34 12 240 2880

J-34 3 246 738

M-90 2 108 216

M-90 2 110 220

M-90 1 128 128

Q-70 5 160 800

Q-70 3 170 510

3.

DYMAC APPLIANCES

COST OF THE INVENTORY -WEIGHTED AVERAGE METHOD

DEC 31

MODEL QTY UNIT COST TOTAL COST

A-10 6 70 420

B-15 8 174 1392

E-60 5 69 345

G-83 9 253 2277

J-34 15 258 3870

M-90 5 121 605

Q-70 8 172 1376

Notes : Assumption : As issue date is not given, it is assumed that issues are made after all receipts of materials.

Issue Rate = value of opening stock + values of first, second & third purchase / total quantity

4. In case of rising prices FIFO method is best as it shows high value for closing stock.