Question

Calculate the value of ending inventory and cost of goods sold using the periodic method and a) first-in, first-out, b) last-in, first-out, and c) weighted-average cost method:

Inventory Costing Methods—Periodic Method The following data are for the Portet Corporation, which sells just one product: Units Unit Cost Beginning Inventory, January 1 1.200 Purchases: February 11 1,500 May 18 1,400 October 23 1,100 Sales: March 1 1,400 July 1 1,400 October 291,000 Calculate the value of ending inventory and cost of goods sold at year-end using the periodic method and (a) first-in, first-out, (b) last-in, first-out, and (c) weighted-average cost method. Hint: For weighted average cost, round the cost per unit to 3 decimal places and round your final answers to the nearest dollar. a. First-in, First-out: Ending Inventory $ 0x Cost of goods sold $ 0x b. Last-in, first-out: Ending Inventory $ 0 Cost of goods sold $ 0x c. Weighted Average Ending Inventory $ 0x Cost of goods sold $ 0x Check

Answer 1

Ending Inventory Cost of Goods Sold First-in, First-out $ 16,200 $ 34,100 Last-in, first-out Weighted Average $ 11,400 $ 13,542 $ 38,900 $ 36,757

Ending inventory = Beginning inventory + Purchases - Sales = 1200 units + (1500+1400+1100)units - (1400+1400+1000)units = 1400 units

FIRST-IN, FIRST OUT METHOD Ending Inventory Units Total Units 1,200 1,500 1,400 1,100 5,200 1,400 Jan 1 Beginning Balance Feb 11 Purchase May 18 Purchase Oct 23 Purchase Cost of Goods Available Less: Ending Inventory Cost of Goods Sold $ $ $ $ Cost 8.00 9.00 10.00 12.00 Cost of Goods Sold Units Total 1,200 $ 9,600.00 1,500 $ 13,500.00 1,100 $ 11,000.00 Total $ 9,600.00 $ 13,500.00 $ 14,000.00 $ 13,200.00 $ 50,300.00 300 1,100 $ $ 3,000.00 13,200.00 1,400 $ 16,200.00 3,800 3,800 $ 34,100.00

LAST-IN, FIRST OUT METHOD AST IN EIDS- Cost of Goods Sold Units Total Ending Inventory Units Total 1,200 $ 9,600.00 200 $ 1,800.00 Jan 1 Beginning Balance Feb 11 Purchase May 18 Purchase Oct 23 Purchase Cost of Goods Available Less: Ending Inventory Cost of Goods Sold Units 1,200 1,500 1,400 1,100 5,200 1,400 3,800 Cost 8.00 9.00 10.00 12.00 $ $ $ $ Total $ 9,600.00 $ 13,500.00 $ 14,000.00 $ 13,200.00 $ 50,300.00 1,300 1,400 1,100 $ 11,700.00 $ 14,000.00 $ 13,200.00 1,400 $ 11,400.00 3,800 $ 38,900.00

WEIGHTED AVERAGE METHOD Ending Inventory Units Total Cost of Goods Sold Units Total Jan 1 Beginning Balance Feb 11 Purchase May 18 Purchase Oct 23 Purchase Cost of Goods Available Less: Ending Inventory Cost of Goods Sold Units 1,200 $ 1,500 $ 1,400 $ 1,100 $ 5,200 Cost Total 8.00 $ 9,600.00 9.00 $ 13,500.00 10.00 $ 14,000.00 12.00 $ 13,200.00 $ 50,300.00 1,400 Avg Cost/Unit $ 9.673 $ 13,542.00 ($9.673 x 1400 units) 3,800 Avg Cost/Unit $ 9.673 $ 36,757.00 ($9.673 x 3800 units)

Cost of Goods Available (A) Number of units available for sale (B) Weighted Avg Cost per Unit (A) +(B) $ 50,300.00 5,200 $ 9.673

FIFO: Under this method of inventory valuation, the oldest purchased inventory items are recorded as sold first in the books of accounts. That is, the ending inventory will always reflect the most recent purchase cost.

LIFO: Under this method of inventory valuation, the latest purchased inventory items are recorded as sold first in the books of accounts. That is, the ending inventory will be valued at the earliest purchase cost.

Weighted average: Under this method, the ending inventory is valued at the weighted average cost per unit.

• Weighted average cost per unit = Cost of inventory available for sale ÷ Number of units available for sale
• Cost of inventory available for sale = Beginning inventory + net purchases