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Chapter 7 Inventories 377 PE 7-5A Periodic inventory using FIFO, LIFO, and weighted average cost methods OBJ. 4 The units of an item available for sale during the year were as follows: Jan. 1 Aug. 7 Dec. 11 Available for sale Inventory Purchase Purchase 12 units at $5,400 18 units at $6,000 15 units at $6,480 45 units $ 64,800 108,000 97,200 $270,000 There are 14 units of the item in the physical inventory at December 31. The periodic in- ventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method. PE 7-5B Periodic inventory using FIFO, LIFO, and weighted average cost methods OBJ. 4 The units of an item available for sale during the year were as follows: Jan. 1 Aug. 13 Nov. 30 Available for sale Inventory Purchase Purchase 20 units at $360 260 units at $342 40 units at $357 320 units $ 7,200 88,920 14,280 $110,400 There are 57 units of the item in the physical inventory at December 31. The periodic in- ventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method.

Answer 1

PE-7-5A) FIFO method

Ending inventory= 14*$6480= $90720

LIFO method

Date		Unit	Unit cost	Total cost
Jan 1	Inventory	12	$5400	$64800
Jan 7	Purchase	2	$6000	12000
		14		$76800

Jan 7 ending inventory= 14-12= 2 units

Weighted average method

Average cost per unit= Total cost of goods available for sale/Total units

= $270000/45= $6000 per unit

Ending inventory= 14*$6000= $84000

	FIFO	LIFO	Weighted average
Ending inventory	$90720	$76800	$84000

PE-7-5B) FIFO method

Date		Unit	Unit cost	Total cost
Nov 30	Purchases	40	$357	$14280
Aug 13	Purchases	17	$342	5814
	Ending inventory	57		$20094

Aug 13 ending inventory units= 57-40= 17 units

LIFO method

Date		Unit	Unit cost	Total cost
Jan 1	Inventory	20	$360	$7200
Aug 13	Purchases	37	$342	12654
	Ending inventory	57		$19854

Aug 13 ending inventory= 57-20= 37 units

Weighted average method

Average cost per unit= Total cost of goods available for sale/Total units

= $110400/320= $345 per unit

Ending inventory= 57*$345= $19665

	FIFO	LIFO	Weighted average
Ending inventory	$20094	$19854	$19665

PE-7-6A)

Item	Inventory Quantity	Cost per unit	Market value per unit	Total Cost	Total market value	Lower of cost or market
Raven 10	1200	$115	$112	(1200*$115)= $138000	(1200*$112)= $134400	$134400
Dove 23	6500	17	22	(6500*$17)= $110500	(6500*$22)= $143000	110500
				$248500	$277400	$244900

PE-7-6B)

Item	Inventory Quantity	Cost per unit	Market value per unit	Total Cost	Total market value	Lower of cost or market
JFW1	6330	$10	$11	(6330*$10)= $63300	(6330*$11)= $69630	$63300
SAW9	1140	$36	$34	(1140*$36)= $41040	(1140*$34)= $38760	38760
				$104340	108390	$102060