Question

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

Jan. 1	Inventory	1,000	units at $15
Feb. 17	Purchase	1,375	units at $16
July 21	Purchase	1,500	units at $17
Nov. 23	Purchase	1,125	units at $18

There are 1,100 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.
$fill in the blank 1

b. Determine the inventory cost by the last-in, first-out method.
$fill in the blank 2

c. Determine the inventory cost by the weighted average cost method.
$fill in the blank 3

Answer 1

A.FIFO

FIFO		Cost of Goods Available for sale	Cost of Goods Sold	Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
1-Jan	Beginning Inventory	1000	$      15.00	$    15,000.00	1000	$       15.00	$    15,000.00
17-Feb	Purchase	1375	$      16.00	$    22,000.00	1375	$       16.00	$    22,000.00
21-Jul	Purchase	1500	$      17.00	$    25,500.00	1500	$       17.00	$   1,93,800.00
23-Nov	Purchase	1125	$      18.00	$    20,250.00	25	$       18.00	$         450.00	1100	$         18.00	$    19,800.00
	Total	5000		$    82,750.00	3900		$    37,450.00	1100		$    19,800.00

B. LIFO

LIFO		Cost of Goods Available for sale	Cost of Goods Sold	Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
1-Jan	Beginning Inventory	1000	$       15.00	$ 15,000.00				1000	$15	$15000
17-Feb	Purchase	1375	$       16.00	$ 22,000.00	1275	$16	$ 20400	100	$16	$1600
21-Jul	Purchase	1500	$       17.00	$ 25,500.00	1500	$       17.00	$    25,500.00
23-Nov	Purchase	1125	$       18.00	$ 20,250.00	1125	$       18.00	$    20,250.00
	Total	5000		$ 82,750.00	3900		$66150	1100		$16600

Ans C weighted average cost method.

c. Weighted Average
Average cost per unit = $82750 / 5000 = $16.55
Ending Inventory = 1100 x $16.55 = $18,205