Question

Inventory by Three Methods; Cost of Goods Sold

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

Jan. 1	Inventory	21 units at $1,800
May 15	Purchase	29 units at $1,950
Aug. 7	Purchase	10 units at $2,040
Nov. 20	Purchase	15 units at $2,100

There are 18 units of the item in the physical inventory at December 31.

Determine the cost of ending inventory and the cost of goods sold by three methods, presenting your answers in the following form:

	Cost
Inventory Method	Ending Inventory	Cost of Goods Sold
a. First-in, first-out method	$	$
b. Last-in, first-out method	$	$
c. Weighted average cost method	$	$

Answer 1

			per unit	total
		units	cost
1-Jan	Inventory	21	1,800	37800
15-May	purchase	29	1,950	56550
7-Aug	purchase	10	2,040	20400
20-Nov	purchase	15	2,100	31500
	total	75		146250
units sold = 75-18=		57
weighted average cost per unit = 146,250/75
			1950
	cost of goods sold = 57*1950=				111150
	inventory                  = 18*1950=				35100
FIFO
1-Jan	Inventory	21	1,800	37800
15-May	purchase	29	1,950	56550
7-Aug	purchase	7	2,040	14280
cost of goods sold	total	57		108630
7-Aug	purchase	3	2,040	6120
20-Nov	purchase	15	2,100	31500
Ending inventory	total	18		37620
LIFO
			per unit	total
		units	cost
1-Jan	Inventory	3	1,800	5400
15-May	purchase	29	1,950	56550
7-Aug	purchase	10	2,040	20400
20-Nov	purchase	15	2,100	31500
cost of goods sold	total	57		113850
			per unit	total
		units	cost
1-Jan	Inventory	18	1,800	32400
				ending	COGS
Inventory Method				inventory
FIFO				37620	108630
LIFO				32400	113850
Weighted average cost method				35100	111150