Question

OBJ. 2, 4 EX 7-12 Periodic inventory by three methods The units of an item available for sale during the year were as follows: TL b. $167,700 Show Me How Jan. 1 Feb. 17 July 21 Nov. 23 Inventory Purchase Purchase Purchase 1,000 units at $120 1,375 units at $128 1,500 units at $136 1,125 units at $140 -- -- There are 1,200 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method; (b) the last-in, first-out method; and (c) the weighted average cost method.

Answer 1

Periodic Method Inventory Perticulars Opening Purchase Purchase Purchase Total Purchase Units Price Cost 1000 120 120000 1375 128 176000 1500 136 204000 1125 140 157500 5000 657500 Weighted average method Weighted Avg cost = ( 657500 / 5000 ) = 131.50 Closing inventory = 1200* 131.50 = $ 157800 FIFO Method Closing inventory = (1125 * 140 ) + ( 75 * 136 ) = $ 167700 LIFO Method Closing inventory = ( 1000 * 120 ) + ( 200 * 128 ) = $ 145600