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 Mar. 10 Aug. 30 Purchase Purchase 50 units @ $108 70 units @ $116 20 units @ $122 60 units @ $124 Dec. 12 Purchase There are 40 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) $ 40 x $ 13,520 X Last-in, first-out (LIFO) | 40|x Weighted average cost 160 x

Answer 1

Solution:-

Calculate inventory cost and merchandise sold :

	Merchandise inventory	Merchandise sold
First in First out	40 * 124 = 4960	23400 - 4960 = 18440
Last in Last out	40*108 = 4320	23400 - 4320 = 19080
Weighted average	(23400 / 200 * 40) = 4680	23400 - 4680 = 18720

Units available for sale = 50 + 70 + 20 + 60 = 200 Units

Cost of goods available for sale = (50 * 108) + (70 * 116) + (20 * 122) + (60 * 124)

                                                   = (5400 + 8120 + 2440 + 7440)

                                                   = 23400