Question

In: Accounting

1. Use the information below to answer the following questions. The following units of an inventory...

1. Use the information below to answer the following questions. The following units of an inventory item were available for sale during the year: Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 The firm uses the periodic inventory system. During the year, 60 units of the item were sold.

a. Calculate the value of ending inventory using FIFO.

b. Calculate the value of ending Inventory using LIFO.

c. Calculate the value of ending inventory using Weighted Average

Solutions

Expert Solution

Requirement a
Valuation Of Inventory using FIFO
Units Rate Value
Begining Inventory 10 55      550
First purchase 25 60 1,500
Second purchase 30 65 1,950
Third Purchase 15 70 1,050
Total Purchase 80 5,050
Sales -60
Ending Inventory 20 68.75 1,375
Note: (15*70)+(5*65) =1,375
Requirement b
Valuation Of Inventory using LIFO
Units Rate Value
Begining Inventory 10 55      550
First purchase 25 60 1,500
Second purchase 30 65 1,950
Third Purchase 15 70 1,050
Total Purchase 80 5,050
Sales -60
Ending Inventory 20 57.5 1,150
Note: (10*55)+(10*60) = 1,150
Requirement c
Valuation Of Inventory using Weighted Average
Units Rate Value
Begining Inventory 10 55      550
First purchase 25 60 1,500
Second purchase 30 65 1,950
Third Purchase 15 70 1,050
Total Purchase 80 63.125 5,050
Sales -60
Ending Inventory 20 63.125 1,263
Note: 20 X63.125 = 1,263

ekkarill92 answered 1 year ago
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