Question

Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory 50 units @ $100 per unit Mar. 10 Purchase 50 units @ $112 per unit Aug. 30 Purchase 10 units @ $120 per unit Dec. 12 Purchase 90 units $122 per unit There are 20 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, presenting your answers in the form below. Round the average cost per unit to the nearest cent and round your final answers to the nearest whole dollar. Schedule of Cost of Merchandise Inventory and cost of Merchandise Sold Inventory Method Merchandise Inventory Merchandise Sold a. FIFO b. LIFO c. Average cost

Answer 1

Answer:

schedule of cost of Merchandise inventory and cost of merchandise sold:

Inventory method	Merchandise inventory	Merchandise sold
FIFO	$2,440 (20 unit*$122/unit)	$20,340
LIFO	$2,000 (20 units*100/unit)	$20,780
Average cost	$2,278 (20 units*($22780/200))	$20,502

Note: Merchandise sold = Total purchases-Merchandise inventory

Total purchases = (50*100)+(50*112)+(10*120)+(90*122) = $ 22,780

Thank you.