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 A 0 b. Last-in, first-out method A 0 c. Weighted average cost method A 0

Answer 1

Solution

	Ending inventory	Cost of goods sold
FIFO	$         37,620.00	$        108,630.00
LIFO	$         32,400.00	$        113,850.00
Weighted average	$         35,100.00	$        111,150.00

Working

	Units	Cost per unit	value
Beginning Balance	21	$             1,800.00	$ 37,800
Purchases
	29	$             1,950.00	$ 56,550
	10	$             2,040.00	$ 20,400
	15	$             2,100.00	$ 31,500
Total	75		$ 146250.0

.

Average Cost of Inventory
Units	(A)	75
Total Cost	(B)	$ 146,250
Average Cost	(C=B/A)	$             1,950.00

.

FIFO
Total Units Available for sale		75
Units Sold		57
Closing Stock in Units		18
Valuation
Ending Inventory	15	@	$       2,100.00	$ 31,500
	3	@	$       2,040.00	$ 6,120
Value Of Ending Inventory				$ 37,620
Cost of Goods sold				$ 108630.
LIFO
Total Units Available for sale		75
Units Sold		57
Closing Stock in Units		18
Valuation
Ending Inventory	18	@	$       1,800.00	$ 32,400
Value Of Ending Inventory				$            32,400
Cost of Goods sold	146250 minus 32400			$         113,850
Weighted Average method
Total Units Available for sale		75
Units Sold		57
Closing Stock in Units		18
Valuation
Ending Inventory	18	@	$       1,950.00	$            35,100
Value Of Ending Inventory				$            35,100
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$         111,150