Question

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	12	units at $31	$372
Aug. 7	Purchase	18	units at $33	594
Dec. 11	Purchase	15	units at $34	510
		45	units	$1,476

There are 16 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

a.	First-in, first-out (FIFO)	$
b.	Last-in, first-out (LIFO)	$
c.	Weighted average cost	$

Answer 1

Solution

	Cost of Ending inventory
FIFO	$                     543
LIFO	$                     504
Weighted average	$                     525

Working

	Units	Cost per unit	value
Beginning Balance	12	$                   31.00	$ 372
Purchases
	18	$                   33.00	$ 594
	15	$                   34.00	$ 510
Total	45		$ 1,476

.

Average Cost of Inventory
Units	(A)	45
Total Cost	(B)	$ 1,476
Average Cost	(C=B/A)	$                   32.80

.

FIFO
Total Units Available for sale		45
Units Sold		29
Closing Stock in Units		16
Valuation
Ending Inventory	15	@	$             34.00	$ 510
	1	@	$             33.00	$ 33
Value Of Ending Inventory				$ 543
Cost of Goods sold				$ 933
LIFO
Total Units Available for sale		45
Units Sold		29
Closing Stock in Units		16
Valuation
Ending Inventory	12	@	$             31.00	$ 372
	4	@	$             33.00	$ 132
Value Of Ending Inventory				$                  504
Cost of Goods sold	1476 minus 504			$                  972
Weighted Average method
Total Units Available for sale		45
Units Sold		29
Closing Stock in Units		16
Valuation
Ending Inventory	16	@	$             32.80	$                  525
Value Of Ending Inventory				$                  525
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$                  951