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 Inventory 40 units @ $108

Mar. 10 Purchase 70 units @ $116

Aug. 30 Purchase 20 units @ $120

Dec. 12 Purchase 70 units @ $126

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

	Units	Unit cost	Total
Jan 1	40	108	4320
Mar 10	70	116	8120
Aug 30	20	120	2400
Dec 12	70	126	8820
Total	200		23660
Average cost per unit	118.3	=23660/200
First-in, first-out (FIFO):
Merchandise Inventory	10020	=(70*126)+(80-70)*120
Merchandise Sold	13640	=23660-10020
Last-in, first-out (LIFO):
Merchandise Inventory	8960	=(40*108)+(80-40)*116
Merchandise Sold	14700	=23660-8960
Weighted average cost:
Merchandise Inventory	9464	=80*118.3
Merchandise Sold	14196	=23660-9464