Question

I am looking to check myself on the following accounting examples:

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 @ $92 Mar. 10 Purchase 70 units @ $102 Aug. 30 Purchase 20 units @ $110 Dec. 12 Purchase 70 units @ $112 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

1
	Units	Unit cost	Total
Jan 1	40	92	3680
Mar 10	70	102	7140
Aug 30	20	110	2200
Dec 12	70	112	7840
Total	200		20860
Average cost per unit	104.3	=20860/200
First-in, first out(FIFO):
Merchandise Inventory	8940	=(70*112)+(80-70)*110
Cost of goods sold	11920	=20860-8940
Last-in, first out(LIFO):
Merchandise Inventory	7760	=(40*92)+(80-40)*102
Cost of goods sold	13100	=20860-7760
Weighted average cost:
Merchandise Inventory	8344	=80*104.3
Cost of goods sold	12516	=20860-8344

2

Age Interval	Balance	Estimated uncollectible %	Estimated uncollectible amount
Not past due	510000	0.50%	2550
1-30 days past due	56100	4%	2244
31-60 days past due	25500	6%	1530
61-90 days past due	18400	14%	2576
91-180 days past due	13300	39%	5187
Over 180 days past due	9700	75%	7275
Total	633000		21362

3

Bad debts expense under allowance method	5250	=300000*1.75%
Net income under allowance method	32550	=33000+4800-5250