Question

Periodic 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 50 units at $124 Mar. 10 Purchase 40 units at $134 Aug, 30 Purchase 20 units at $138 Dec. 12 Purchase 90 units at $144 There are 40 units of the item in the physical inventory of December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar Cost of Ending Inventory and Cost of Goods Sold Inventory Method Ending Inventory Cost of Goods Sold First first out ) Lifesto (UTO) Weighted average cost

Answer 1

Ans.	Inventory Method	Ending Inventory	Cost of goods sold
	FIFO	$5,760	$21,520
	LIFO	$4,960	$22,320
	Weighted average	$5,456	$21,824
	Available for sale
	Date		Units	Rate	Total
	1-Jan		50	$124.00	$6,200
	10-Mar		40	$134.00	$5,360
	30-Aug		20	$138.00	$2,760
	12-Dec		90	$144.00	$12,960
	Cost of goods available for sale		200		$27,280
	Periodic FIFO:
	Date	Units	Rate	Total
	12-Dec	40	$144.00	$5,760
	Ending inventory	40		$5,760
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$27,280 - $5,760
	$21,520
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
	Periodic LIFO:
	Date	Units	Rate	Total
	1-Jan	40	$124.00	$4,960
	Ending inventory	40		$4,960
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$27,280 - $4,960
	$22,320
	*In LIFO method the units that have purchased last, are released the first one and ending inventory units
	remain from the first purchase.
	Weighted average cost:
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$27,280 / 200
	$136.40	per unit
	Ending inventory =   Average cost per unit * Ending inventory units
		$136.40 * 40
		$5,456
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$27,280 - $5,456
	$21,824