Question

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	10	units at $42	$420
Aug. 7	Purchase	15	units at $43	645
Dec. 11	Purchase	10	units at $44	440
		35	units	$1,505

There are 20 units of the item in the physical inventory at December 31. The periodic inventory 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 (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

Answer 1

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Calculation of units sold
Date	No. of Units
1-Jan	10.00
7-Aug	15.00
11-Dec	10.00
Total	35.00
Ending inventory	20.00
Units sold	15.00
Periodic FIFO
Date	Cost of Goods available for sale			Cost of Goods sold			Inventory Balance
	No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
1-Jan	10.00	42.00	420.00	10.00	42.00	420.00
7-Aug	15.00	43.00	645.00	5.00	43.00	215.00	10.00	43.00	430.00
11-Dec	10.00	44.00	440.00				10.00	44.00	440.00
Total	35.00		1,505.00	15.00		635.00	20.00		870.00
So ending Inventory Balance as per FIFO is $ 870.
Periodic LIFO
Date	Cost of Goods available for sale			Cost of Goods sold			Inventory Balance
	No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
1-Jan	10.00	42.00	420.00				10.00	42.00	420.00
7-Aug	15.00	43.00	645.00	5.00	43.00	215.00	10.00	43.00	430.00
11-Dec	10.00	44.00	440.00	10.00	44.00	440.00
Total	35.00		1,505.00	15.00		655.00	20.00		850.00
So ending Inventory Balance as per LIFO is $ 850.
Periodic Weighted Average
Date	No. of Units	Cost per unit	Amount
1-Jan	10.00	42.00	420.00
7-Aug	15.00	43.00	645.00
11-Dec	10.00	44.00	440.00
Total	35.00		1,505.00
Average Cost per unit		43.00		This is Total cost/ Total Units
Inventory Balance	20.00		860.00	This is 20 Units* $ 43.
So ending Inventory Balance as per Weighted Average is $ 860.