Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 40 units @ $122 Inventory Purchase Mar. 10 70 units @ $132 Aug. 30 Purchase 20 units @ $136 Dec. 12 Purchase 70 units $140 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 Inventory Method Merchandise Inventory Merchandise Sold First in first-out (FIFO) Last-in, first out (LIFO) Weighted average cost

Answer 1

	COST
INVENTORY METHOD	MERCHANDISE INVENTORY	MERCHANDISE SOLD
FIFO	11160	15480
LIFO	10160	16480
WEIGHTED AVERAGE COST	10656	10160

See the calculation Below,

Cost of merchandise available for sale
Units	Amount
40	122	4880
70	132	9240
20	136	2720
70	140	9800
200		26640
200 units an average cost of $133.20

a) First in first out

Merchandise Inventories

70 unit @ 140 = $9,800

10 unit @ 136 = $1,360

So, 80 units price equal to $11,160

Merchandise Sold =26640 - 11160 = $15,480

b) Last in first out

Merchandise Inventories

40 unit @ 122 = $4,880

40 unit @ 132 = $5.280

So, 80 units price equal to $10,160

Merchandise Sold =26640 - 10160 = $16,480

C)Weighted Average Cost

80 unit @ 133.20(refer to above table) = 10656

Merchandise Inventories = $10,656

Merchandise Sold =26640 - 10656 = $10,160