Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold

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

Jan. 1	Inventory	50 units @ $120
Mar. 10	Purchase	60 units @ $128
Aug. 30	Purchase	20 units @ $132
Dec. 12	Purchase	70 units @ $134

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method	Merchandise Inventory	Merchandise Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

Answer 1

As per below calculation we can see answer is different method as FIFO method, LIFO method and Average method because of as per FIFO method inventory to issued from first purchase whereas per LIFO method goods sales from last purchase per weighted average method material issued to production at Average cost of goods available.

First find out number of units sold

Number of units Sold

Total units available	200 units
Less: Ending inventory	80 units
No. of units sold	120 units

Ans.:

Inventory Methods	Cost of Merchandise Inventory	Cost of Merchandise Sold
FIFO	$ 10,700	$ 14,000
LIFO	$ 8,840	$ 15,860
Weighted Average	$ 9,880	$ 14,820

FIFO Method ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Jan,1	50	$ 120	$ 5,000
Purchase
March, 10	60	$ 128	$ 7,680
August, 30	20	$ 132	$ 2,640
December, 12	70	$ 134	$ 9,380
Goods available for Sales	200		$ 24,700
Less: Cost of Goods Sold
From Beginning Inventory Jan,1	50	$ 120	$ 5,000
From Purchase on March, 10	60	$ 128	$ 7,680
From Purchase on August, 30	10	$ 132	$ 1,320
Total cost of Goods sold	120		$ 14,000
Ending Inventory
From Purchase on August, 30	10	$ 132	$ 1,320
From Purchase on December, 12	70	$ 134	$ 9,380
Total Ending Inventory	80		$ 10,700

LIFO Method ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Jan,1	50	$ 120	$ 5,000
Purchase
March, 10	60	$ 128	$ 7,680
August, 30	20	$ 132	$ 2,640
December, 12	70	$ 134	$ 9,380
Goods available for Sales	200		$ 24,700
Less: Cost of Goods Sold
From Purchase on December, 12	70	$ 134	$ 9,380
From Purchase on August, 30	20	$ 132	$ 2,640
From Purchase on March, 10	30	$ 128	$ 3,840
Total cost of Goods sold	120		$ 15,860
Ending Inventory
From Beginning Inventory Jan,1	50	$ 120	$ 5,000
From Purchase on March, 10	30	$ 128	$ 3,840
Total Ending Inventory	80		$ 8,840

Weighted Average Method ( Periodic method )
Transaction	Units	Cost per unit	Total
Beginning Inventory Jan,1	50	$ 120	$ 5,000
Purchase
March, 10	60	$ 128	$ 7,680
August, 30	20	$ 132	$ 2,640
December, 12	70	$ 134	$ 9,380
Goods available for Sales	200		$ 24,700
Less: Cost of Goods Sold	120	$ 123.5	$ 14,820
Total cost of Goods sold	120		$ 14,820
Ending Inventory	80	$ 123.5	$ 9,880

As per weighted average method goods to sold average cost of total inventory available for sales as a following solution.

Weighted average Cost per unit               = Total Cost of Goods available / No. Of units for sales               = $ 24,700 / 200 units               = $ 123.5 per units