Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 15 units at $28 $420 Aug. 7 Purchase 18 units at $31 558 Dec. 11 Purchase 14 units at $33 462 47 units $1,440 There are 20 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

a. FIFO

In FIFO method we finds that the item purchased first will be sold first therefore at end we have 20 unit of item at physical inventory which means this 20 unit will be out of last items purchased

Therefore

Date	Unit	Price	Amount
Dec. 11	14	$33	$462
Aug. 7	6	$31	$186
Total	20		$648

b. LIFO

In LIFO method we finds that the item purchased in last will be sold first therefore at end we have 20 unit of item at physical inventory which means this 20 unit will be out of first items purchased

Date	Unit	Price	Amount
Jan. 1	15	$28	$420
Aug. 7	5	$31	$155
Total	20		$575

c. Weighted Method

Date	Unit	Price	Amount	Accumulated Unit	Accumulated Amount	Weighted Price
Jan. 1	15	$28	$420	15	$420	$28
Aug. 7	18	$31	$558	33	$978	29.64
Dec. 11	14	$33	$462	47	$1,440	30.64

Inventory Cost = 20 Unit X $30.64 = $612.8

Perpetual Inventory system by using LIFO method

Date	Purchase			Sales			Balance
	Unit	Price	Amount	Unit	Price	Amount	Unit	Price	Amount
January 1	105	$30	$3,150				105	$30	$3,150
January 5				85	$30	$2,550	20	$30	$600
January 11	118	$34	$4,012				20	$30	$600
							118	$34	$4,012
January 21				99	$34	$3,366	20	$30	$600
							19	$34	$646

So the Inventory as on 31 January $1,246

I hope this clear your doubt.

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