Question

Check my work E7-6 Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost L07-2 Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: 0.62 points Units Unit Cost $5 1,850 eBook Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 4. Print 6,150 4,030 2,850 References Required: Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 4 decimal places and final answers to nearest whole dollar amount.) FIFO L IFO Average Cost Ending inventory Cost of goods sold

Answer 1

	FIFO	LIFO	Average cost
Ending inventory	5,700	13,250	9,929
Cost of goods sold	36,210	28,660	31,981

Calculations:

FIFO: Here the periodic inventory system is being used. Ending inventory count = 2,850 units and so this will pertain to the most recent cost which is $2. Hence ending inventory = 2,850 units *$2 = $5,700. Now no. of units sold during the year = beginning inventory + purchase – ending inventory = 1850+(6150+4030)-2850 = 9,180 units. Thus cost of goods sold = (1850*5)+(6150*4)+(1180*2) = 36,210

In case of LIFO the ending inventory will be = (1850*5)+(1000*4) = 13,250. Cost of goods sold = (4030*2)+(5150*4) = 28,660

Average cost per unit = (1850*5)+(6150*4)+(4030*2)/(1850+6150+4030)

= 3.4838

Thus ending inventory = 2850*3.4838 = 9,929

Cost of goods sold = 9180*3.4838 = 31,981