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 | |||
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