eBook Show Me How Calculator Periodic inventory by three methods; cost of goods
ID: 2340284 • Letter: E
Question
eBook Show Me How Calculator Periodic inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory Mar. 10 Purchase Aug. 30 Purchase Dec. 12 Purchase There are 40 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one de 40 units at $90 60 units at $98 10 units at $106 90 units at $112 whole dollar. Cost of Ending Inventory and Cost of Goods Sold Inventory MethodEnding Inventory Cost of Goods Sold irst-out (FIFO) s n, flrst-out (FO heck My Work
Explanation / Answer
Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost Jan-1 Op. Inventory 40 90.00 3,600 Mar-10 Purchases 60 98.00 5,880 Aug-30 Purchases 10 106.00 1,060 Dec-12 Purchases 90 112.00 10,080 Total 200 20,620 Ending Inventory (In Units) =40 Units Answer 1. FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Dec-12 40 112.00 4,480 Total 40 4,480 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 4,480 Cost of Goods Sold 16,140 Answer 2. LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Jan-1 40 90.00 3,600 Total 40 3,600 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 3,600 Cost of Goods Sold 17,020 Answer 3. Average Cost Per Unit = $20,620 (Cost of goods available for sale) / 200 Units ( Units Available for Sale) Average Cost Per Unit = $103.10 per Unit (Approx.) Value of Ending Inventory = 40 Units X $103.10 per unit Value of Ending Inventory = $4,124 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 4,124 Cost of Goods Sold 16,496 Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost Jan-1 Op. Inventory 40 90.00 3,600 Mar-10 Purchases 60 98.00 5,880 Aug-30 Purchases 10 106.00 1,060 Dec-12 Purchases 90 112.00 10,080 Total 200 20,620 Ending Inventory (In Units) =40 Units Answer 1. FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Dec-12 40 112.00 4,480 Total 40 4,480 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 4,480 Cost of Goods Sold 16,140 Answer 2. LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Jan-1 40 90.00 3,600 Total 40 3,600 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 3,600 Cost of Goods Sold 17,020 Answer 3. Average Cost Per Unit = $20,620 (Cost of goods available for sale) / 200 Units ( Units Available for Sale) Average Cost Per Unit = $103.10 per Unit (Approx.) Value of Ending Inventory = 40 Units X $103.10 per unit Value of Ending Inventory = $4,124 Cost of Goods Sold: Cost of Goods Available for Sale 20,620 Less: Ending Inventory 4,124 Cost of Goods Sold 16,496
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