Question

Nittany 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: Units 1,860 Unit Cost $5 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,130 2,810 4,090 7 8 Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) FIFO LIFO Average Cost Ending inventory Cost of goods sold

Answer 1

	FIFO method
		Purchase(receipt)				Sales				Balance
		Qty.	Rate	Amount		Qty.	Rate	Amount		Qty.	Rate	Amount
	Beg. Bal.	1,860	5	$9,300		1860	5	$9,300
	21-Mar	5,130	7	$35,910		3850	7	$26,950
	01-Aug	2,810	8	$22,480
	end. Bal.									1,280	7	$8,960
										2,810	8	$22,480
								$36,250				$31,440
	LIFO method
		Purchase(receipt)				Sales				Balance
		Qty.	Rate	Amount		Qty.	Rate	Amount		Qty.	Rate	Amount
	Beg. Bal.	1,860	5	$9,300		2810	8	$22,480
	21-Mar	5,130	7	$35,910		2900	7	$20,300
	01-Aug	2,810	8	$22,480
	End. Bal.									1,860	5	$9,300
										2,230	7	$15,610
								$42,780				$24,910
	Average cost
		Purchase(receipt)				Sales				Balance
		Qty.	Rate	Amount		Qty.	Rate	Amount		Qty.	Rate	Amount
	Beg. Bal.	1,860	5	$9,300
	21-Mar	5,130	7	$35,910
	01-Aug	2,810	8	$22,480
	End. Bal.					5,710	6.91	$39,456		4,090	6.91	$28,262
		9,800	6.91	$67,690
								$39,456				$28,262
	Hence,	FIFO	LIFO	Average cost
	Ending inventory	31,440	$24,910	$28,262
	Cost of goods sold	36,250	$42,780	$39,456

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