Periodic inventory by three methods; cost of goods sold The units of an item ava

Question

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 60 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 decimal and final answers to the nearest whole dollar 30 units at $102 70 units at $114 30 units at $118 70 units at $120 Inventory Method First-in, first-out (FIFO) Last-in, first-out (Fo Weighted average cost Ending Inventory Cost of Goods Sokd

Explanation / Answer

Cost of Goods Available for Sale Date Explanation Units Unit Cost Total Cost 1-Jan Op. Inventory                   30            102.00            3,060 10-Mar Purchases                   70            114.00            7,980 30-Aug Purchases                   30            118.00            3,540 12-Dec Purchases                   70            120.00            8,400 Total                 200          22,980 Ending Inventory (In Units) = 60 Answer 1. FIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Dec-18                         60           120.00              7,200 Total                         60              7,200 Cost of Goods Sold: Beginning Inventory              3,060 Add: Purchases            19,920 Cost of Goods Available for Sale            22,980 Less: Ending Inventory              7,200 Cost of Goods Sold            15,780 Answer 2. LIFO Method Value of Ending Inventory Date Units Unit Cost Total Cost Jan-18                         30                 102              3,060 Mar-18                         30                 114              3,420 Total                         60              6,480 Cost of Goods Sold: Beginning Inventory              3,060 Add: Purchases            19,920 Cost of Goods Available for Sale            22,980 Less: Ending Inventory              6,480 Cost of Goods Sold            16,500 Answer 3. Average Cost Per Unit = $22,980 (Cost of goods available for sale) / 200 Units ( Units Available for Sale) Average Cost Per Unit = $114.90 per Unit (Approx.) Value of Ending Inventory = 60 Units X $114.90 per unit Value of Ending Inventory = $6,894 Cost of Goods Sold: Beginning Inventory              3,060 Add: Purchases            19,920 Cost of Goods Available for Sale            22,980 Less: Ending Inventory              6,894 Cost of Goods Sold            16,086

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