Question

1)

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: 50 units@ $130 Jan. 1 Inventory Mar. 10 Purchase 60 units @ $138 Aug. 30 Purchase 20 units @ $142 70 units@ $144 Dec. 12 Purchase There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar Cost of Merchandise Inventory and Cost of Merchandise Sold Merchandise Inventory Merchandise Sold Inventory Method First-in, first-out (FIFO) $ Last-in, first-out (LIFO) Weighted average cost

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Answer 1

1)

Date	Particulars	Units	Unit cost	Total cost
Jan. 1	Inventory	50	130	6500
Mar. 10	Purchases	60	138	8280
Aug. 30	Purchases	20	142	2840
Dec. 12	Purchases	70	144	10080
Goods available for sale		200		27700

Ending inventory units

80

FIFO method : In this method those goods are sold first, which are purchased first and the ending inventory is from recent purchases.
Merchandise inventory = ( 70 * 144 ) + ( 10 * 142 )	11500
LIFO method : In this method those goods are sold first which are purchased last and the ending inventory is from beginning inventory and earlier purchases.
Merchandise inventory = ( 50 * 130 ) + ( 30 * 138 )	10640
Weighted average cost method :
Weighted average cost per unit = Cost of goods available for sale / Unit available for sale = 27700 / 200	138.5
Merchandise inventory = 80 * 138.5	11080

Final answer :
Cost of merchandise inventory and cost of merchandise sold
Inventory method	Merchandise inventory	Merchandise sold [ Cost of goods available for sale - Merchandise inventory ]
First-in, first out (FIFO)	11500	16200
Last-in, First-out (LIFO)	10640	17060
Weighted average cost	11080	16620

2)

Date	Particulars	Units	Unit cost	Total cost
Jan. 1	Inventory	1100	120	132000
Feb. 17	Purchases	1405	122	171410
Jul. 21	Purchases	1560	125	195000
Nov. 23	Purchases	1130	125	141250
Goods available for sale		5195		639660

Enidng inventory units

1205

FIFO method : In this method those goods are sold first, which are purchased first and the ending inventory is from recent purchases.
Inventory cost = ( 1130 * 125 ) + ( 75 * 125 )	150625
LIFO method : In this method those goods are sold first which are purchased last and the ending inventory is from beginning inventory and earlier purchases.
Inventory cost = ( 1100 * 120 ) + ( 105 * 122 )	144810
Weighted average cost method :
Weighted average cost per unit = Cost of goods available for sale / Unit available for sale = 639660 / 5195	123.13
Inventory cost = 1205 * 123.13	148372