Question

P6.3A Vista Company Inc. had a beginning inventory of 100 units of Product RST at a cost of $8 per unit. During the year, purchases were:

Feb. 20		600 units at $ 9		Aug. 12		400 units at $11
May  5		500 units at $10		Dec.  8		100 units at $12

Vista Company uses a periodic inventory system. Sales totaled 1,500 units.

Instructions

a. Determine the cost of goods available for sale.

b. Determine the ending inventory and the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Round average unit cost to three decimal places.)

Answer 1

	Unit	Unit cost	Total cost
Beginning inventory	100	8	800
Purchase	600	9	5400
Purchase 2	500	10	5000
Purchase 3	400	11	4400
Purchase 4	100	12	1200
Total	1700		16800

a) Cost of goods available for sale = $16800

b) Calculate following

	FIFO	LIFO	Average cost
Ending inventory	(100*12+100*11) = 2300	(800+900) = 1700	16800/1700 = 9.882*200 = 1976
Cost of goods sold	16800-2300 = 14500	16800-1700 = 15100	16800-1976 = 14824