Question

A company just starting business made the following four inventory purchases in June: June 1 150 units $ 490 June 10 200 units 785 June 15 200 units 830 June 28 150 units 810 $2.915 A physical count of merchandise inventory on June 30 reveals that there are 220 units on hand. Using the Periodic Inventory System. a. Using the LIFO inventory method, the value of the ending inventory on June 30 is? b. Using the Average Cost Inventory Method what is the Cost of Goods Sold? c. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is?

Answer 1

Solution to part (a)

Value of Ending Inventory under LIFO

Date	Units	Amount
June 10	70	= (785/200) *70 = $ 274.75
June 1	150	$ 490.00
Total	220	$ 764.75

Solution to part (b)

Average cost / unit = Total of goods available for sale /Total units = $ 2915/700 = $ 4.16/ unit.

Ending Inventory = 220 Units

Cost of Ending Inventory = 220 * 4.16 = $ 915.2

Cost of goods sold = Cost of goods available for sale - ending inventory = $ 2915 - 915.2 = $ 1996.8

Solution to part (c)

Cost of Goods available for sale = $ 2915

Ending Inventory

Date	Units	Amount
June 15	70	= (830/200) *70 = $ 290.5
June 20	150	$ 810
Total	220	$ 1100.5

Cost of goods sold = Cost of goods available for sale - ending inventory

= $ 2915- $ 1100.5

= $ 1814.5