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: Unit Cost Units 1,930 $4 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 5,200 2,870 4,170 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.) LIFO Average Cost Ending inventory Cost of goods sold | $ 1 $ FIFO 29,190 56,950

Answer 1

Ans.		FIFO	LIFO	Average Cost
	Ending inventory	$27,890	$21,160	$24,603
	Cost of goods sold	$31,120	$37,850	$34,407
	*WORKING NOTES:
	Available for sale
	Date		Units	Rate	Total
	01-Jan		1930	$4.00	$7,720
	21-Mar		5200	$6.00	$31,200
	01-Aug		2870	$7.00	$20,090
	Cost of goods available for sale		10000		$59,010
	Unit sold   = Units available for sale - Ending inventory units
	10,000 - 4,170
	5830	units
a	Periodic FIFO:
	Date	Units	Rate	Total
	01-Aug	2870	$7.00	$20,090
	21-Mar	1300	$6.00	$7,800
	Ending inventory	4170		$27,890
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$59,010 - $27,890
	$31,120
	*In FIFO method the units that have purchased first (earliest), are released the first one and the ending inventory
	units remain from the last (recent) purchases.
b	Periodic LIFO:
	Date	Units	Rate	Total
	01-Jan	1930	$4.00	$7,720
	21-Mar	2240	$6.00	$13,440
	Ending inventory	4170		$21,160
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$59,010 - $21,160
	$37,850
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.
c	Weighted average cost:
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$59,010 / 10,000
	$5.90	per unit
	Ending inventory =   Average cost per unit * Ending inventory units
		4,170 * $5.90
		$24,603
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$59,010 - $24,603
	$34,407