Question

950 Periodic Inventory Using FIFO, LIFO, and weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at $49 $980 Aug. 13 Purchase 19 units at $50 Nov. 30 Purchase 20 units at $52 1,040 Available for sale 59 units $2,970 There are 24 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the (a) first-in, first- out (FIFO) method; (b) last-in, first-out (LIFO) method; and (c) weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar). a. First-in, first-out (FIFO) b. Last-in, first-out (LIFO) c. Weighted average cost X х

Answer 1

FIFO method: the inventory would consist of the most recent purchased items. The 24 units can be traced as 20 units from Nov 30 purchase and the remaining 4 units from Aug 13 purchase

Ending inventory as per FIFO = 20 * 52 + 4 * 50

= 1040 + 200

= 1240

LIFO method: Ending inventory items consist of the first most purchases, The 24 units can be traced as 20 units of Jan 1 and remaining 4 units from Aug 13 purchase

Ending inventory as per LIFO = 20 *49 + 4 * 50 = 980 + 200

= 1180

Weighted average cost method:

Ending inventory = Number of Ending inventory units * Goods available for sale/ Units available for sale

= 24 units * 2970 / 59

= 24 * 50.34

= 1208