In: Accounting
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 | $ 44 | 4 at | $ 47 | 4 at | $ 50 | 5 | |||
B15 | 8 at | $ 94 | 4 at | 85 | 3 at | 91 | 6 at | 98 | 7 | ||
E60 | 3 at | 69 | 3 at | 59 | 15 at | 62 | 9 at | 64 | 5 | ||
G83 | 7 at | 221 | 6 at | 229 | 5 at | 239 | 10 at | 238 | 9 | ||
J34 | 12 at | 79 | 10 at | 81 | 16 at | 88 | 16 at | 89 | 13 | ||
M90 | 2 at | 116 | 2 at | 118 | 3 at | 136 | 3 at | 138 | 5 | ||
Q70 | 5 at | 163 | 4 at | 173 | 4 at | 178 | 7 at | 183 | 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.
Previous
1.FIFO Method
Model |
Quantity ($) |
Unit Cost ($) |
Total Cost ($) |
A10 |
4 |
50 |
200 |
A10 |
1 |
47 |
47 |
B15 |
6 |
98 |
588 |
B15 |
1 |
91 |
91 |
E60 |
5 |
64 |
320 |
G83 |
10 |
238 |
2,380 |
J34 |
13 |
89 |
1,157 |
M90 |
3 |
138 |
414 |
M90 |
2 |
136 |
272 |
Q70 |
7 |
183 |
1,281 |
Q70 |
1 |
183 |
183 |
Total |
52 |
1,326 |
6,933 |
2. Last in First Out Method
Model |
Quantity ($) |
Unit Cost ($) |
Total Cost ($) |
A10 |
4 |
44 |
176 |
A10 |
1 |
47 |
47 |
B15 |
7 |
94 |
658 |
E60 |
3 |
69 |
207 |
E60 |
2 |
59 |
118 |
G83 |
7 |
221 |
1,547 |
GF83 |
2 |
229 |
458 |
J34 |
12 |
79 |
948 |
J34 |
1 |
81 |
81 |
M90 |
2 |
116 |
232 |
M90 |
2 |
118 |
236 |
M90 |
1 |
136 |
136 |
Q70 |
5 |
163 |
815 |
Q70 |
3 |
173 |
519 |
Total |
52 |
1,688 |
6,178 |
Weighted Method
Model |
Quantity($) |
Unit Cost ($) |
Total Cost($) |
AA10 |
5 |
47 |
235 |
B15 |
7 |
93 |
653 |
E60 |
5 |
63 |
315 |
G83 |
9 |
232 |
2,088 |
J34 |
13 |
85 |
1,105 |
M90 |
5 |
129 |
645 |
Q70 |
8 |
175 |
1,400 |
Total |
52 |
824 |
6,441 |
4. It's better to use last in first out (LIFO) method when there is rice in price because last in inventory will have the high cost which will reduce the gross profit and income tax payable.
Notes
Total cost = Unit price * Number unit in inventory.
Per unit cost in weighted average method = total cost on purchase of units /Number of units purchased.