Question

Consider the following information for Maynor Company, which uses a periodic inventory system:

Consider the following information for Maynor Company, which uses a periodic inventory system Transaction Beginning Inventory Purchase Purchase Purchase Units Unit Cost Total Cost 12 January 1 March 28 August 22 October 14 Goods Available for Sale 24 29 87 $ 62 68 72 78 $744 1,496 1,728 2,262 $6,230 The company sold 29 units on May 1 and 24 units on October 28 Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods a. FIFO b. LIFO c. Weighted Average

Answer 1

FIFO method states that inventory purchased first is sold first.

Under periodic inventory method, the records are updated at the end of the period and not continuously

Units in ending inventory = 87-29-24

= 34 units

Ending inventory = 29*78 + 5*72

= $2,622

Cost of goods sold = Total Cost – Cost of Ending Inventory

= $6,230-2,622

= $3,608

b.LIFO method states that inventory purchased later will be sold first

Ending Inventory = 12*62 + 22*68

= $2,240

Cost of Goods Sold = 6,230-2,240 = $3,990

C,Weighted average method takes into account weighted average cost

Weighted average cost = 6,230/87 = $71.61

Ending inventory = 34*71.61 = $2,435

Cost of goods sold = 3,795