Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an it

Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold
The units of an item available for sale during the year were as follows:

Jan. 1 Inventory 50 units @ $110
Mar. 10 Purchase 60 units @ $118
Aug. 30 Purchase 10 units @ $124
Dec. 12 Purchase 80 units @ $128

There are 40 units of the item in the physical inventory at December 31. The periodic inventory system is used.
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Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations and final answers to the nearest whole dollar.




Schedule of Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method
Merchandise Inventory
Merchandise Sold
FIFO


LIFO


Average cost

Explanation / Answer

Date Total units Cost per unit 01-Jan 50 110 10-Mar 60 118 30-Aug 10 124 12-Dec 80 128 200 Closing inventory 31-Dec 40 Units sold 160 Cost of goods sold Under FIFO Units Cost per unit Total cost 50 110 5500 60 118 7080 10 124 1240 40 128 5120 160 18940 Cost of goods sold Under LIFO Units Cost per unit Total cost 80 128 10240 10 124 1240 60 118 7080 10 110 1100 160 19660 Cost of goods sold Under Weighted avergae method Units Cost per unit Total cost 50 110 5500 60 118 7080 10 124 1240 80 128 10240 200 24060 Therefore weighted average cost = 24,060/200*160                           19,248

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