Question

Periodic Inventory by Three Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 1,035 units $134 Feb. 17 Purchase 1,385 units $136 Jul. 21 Purchase 1,615 units o $139 Nov. 23 Purchase • 1,150 units $139 There are 1,225 units of the item in the physical Inventory at December 31. The periodic inventory system is used. Do not round intermediate calculation and round final answer to nearest whole value. a. Determine the inventory cost by the first-In, first out method. $ 214,060 x b. Determine the inventory cost by the last in, first-out method. 160,450 X c. Determine the inventory cost by the weighted average cost method. $ 168,000 X

Answer 1

a.	Under FIFO method,Goods purchased first are sold first.
	Hence,ending inventory consist of units from latest purchase
	Cost of 1225 units:
						$
	Nov 23 purchase		1150 units at $ 139			159850
	July 21 purchase		75 units at $ 139			10425
			(1225-1150)
	Total					170275
b.	Under LIFO method,Goods purchased last are sold first.
	Hence,ending inventory consist of units from earlier purchase
	Cost of 1225 units:
						$
	Jan 1 inventory		1035 units at $ 134			138690
	Feb 17 purchase		190 units at $ 136			25840
			(1225-1035)
	Total					164530
c.	Under weighted average method,
	Cost of inventory=Units in inventory*Weighted average cost per unit
	Weighted average cost per unit=(Total cost of purchase+Total cost of beginning inventory)/(Total units purchased+Total units in beginning inventory)
	Date	Particulars		# of units	Cost per unit	Total cost
	Jan 1.	Inventory		1035	134	138690
	Feb 17.	Purchase		1385	136	188360
	Jul 21.	Purchase		1615	139	224485
	Nov 23.	Purchase		1150	139	159850
				5185		711385
	Weighted average cost per unit=711385/5185=$ 137.2006
	Cost of inventory=1225*137.2006=$ 168070.7