XYZ Company\'s inventory records for the current year are as follows: Number of

Question

XYZ Company's inventory records for the current year are as follows: Number of Units Cost per Unit Total Cost Beginning inventory 1,200 $3.00 $3,600 First purchase 3,000 $2.90 8,700 Second purchase 3,500 $2.80 9,800 Third purchase 2,800 $2.70 7,560 Fourth purchase 1,500 $2.60   3,900 Goods available for sale 12,000 $33,560 Units sold during the year 9,000 Required: Compute the cost of goods sold and the ending inventory using the periodic inventory method for the following inventory costing methods listed in the table below. I have set up a table so you know you can check your work, since Cost of Goods Sold + Ending Inventory should always equals Cost of Goods Available for Sale. Solution: Each area—COGS and EI per inventory method

Explanation / Answer

fifo ending inventory   units available for sale - units sold ending inventory   12000 - 9000 ending inventory   3000 calculation of ending inventory value ending inventory of 3000 units consist of 1500 units from third purchases and 1500 units from fourth purchases from third purchases 1500 * 2.70 4050 from fourth purchases 1500 * 2.60 3900 total ending inventory 7950 calculation of cost of goods sold opening inventory 1200 * 3 3600 first purchases 3000 * 2.90 8700 second purchases 3500 * 2.80 9800 third purchases 1300 * 2.70 3510 total 25610 lifo ending inventory   units available for sale - units sold ending inventory   12000 - 9000 ending inventory   3000 calculation of ending inventory value ending inventory of 3000 units consist of 1200 units from opening inventory and 1800 units from first purchases from opening inventory 1200 * 3 3600 from first purchases    1800 * 2.90 5220 total ending inventory 8820 calculation of cost of goods sold first purchases 1200 * 2.90 3480 second purchases 3500 * 2.80 9800 third purchases 2800 * 2.70 7560 fourth purchases 1500 * 2.60 3900 total 24740 Average cost = 24740 / 12000 Average cost = 2.06 ending inventory 3000 * 2.06 ending inventory 6180 cost of goods sold 9000 * 2.06 cost of goods sold 18540

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