Periodic Inventory by Three Methods Dymac Appliances uses the periodic inventory
ID: 2551127 • Letter: P
Question
Periodic Inventory by Three Methods
Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:
Required:
1. Determine the cost of the inventory on December 31 by the first-in, first-out method.
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the units PURCHASED MOST RECENTLY first.
2. Determine the cost of the inventory on December 31 by the last-in, first-out method.
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. If units are in inventory at two different costs, enter the OLDEST units first.
3. Determine the cost of the inventory on December 31 by the weighted average cost method.
4. would be preferred for income tax purposes in periods of rising prices.
Previous
Purchases Invoices Model Inventory,January 1 1st 2nd 3rd Inventory Count,
December 31 A10 __ 4 at $ 44 4 at $ 47 4 at $ 50 5 B15 8 at $ 94 4 at 85 3 at 91 6 at 98 7 E60 3 at 69 3 at 59 15 at 62 9 at 64 5 G83 7 at 221 6 at 229 5 at 239 10 at 238 9 J34 12 at 79 10 at 81 16 at 88 16 at 89 13 M90 2 at 116 2 at 118 3 at 136 3 at 138 5 Q70 5 at 163 4 at 173 4 at 178 7 at 183 8
Explanation / Answer
1.FIFO Method
Model
Quantity ($)
Unit Cost ($)
Total Cost ($)
A10
4
50
200
A10
1
47
47
B15
6
98
588
B15
1
91
91
E60
5
64
320
G83
10
238
2,380
J34
13
89
1,157
M90
3
138
414
M90
2
136
272
Q70
7
183
1,281
Q70
1
183
183
Total
52
1,326
6,933
2. Last in First Out Method
Model
Quantity ($)
Unit Cost ($)
Total Cost ($)
A10
4
44
176
A10
1
47
47
B15
7
94
658
E60
3
69
207
E60
2
59
118
G83
7
221
1,547
GF83
2
229
458
J34
12
79
948
J34
1
81
81
M90
2
116
232
M90
2
118
236
M90
1
136
136
Q70
5
163
815
Q70
3
173
519
Total
52
1,688
6,178
Weighted Method
Model
Quantity($)
Unit Cost ($)
Total Cost($)
AA10
5
47
235
B15
7
93
653
E60
5
63
315
G83
9
232
2,088
J34
13
85
1,105
M90
5
129
645
Q70
8
175
1,400
Total
52
824
6,441
4. It's better to use last in first out (LIFO) method when there is rice in price because last in inventory will have the high cost which will reduce the gross profit and income tax payable.
Notes
Total cost = Unit price * Number unit in inventory.
Per unit cost in weighted average method = total cost on purchase of units /Number of units purchased.
Model
Quantity ($)
Unit Cost ($)
Total Cost ($)
A10
4
50
200
A10
1
47
47
B15
6
98
588
B15
1
91
91
E60
5
64
320
G83
10
238
2,380
J34
13
89
1,157
M90
3
138
414
M90
2
136
272
Q70
7
183
1,281
Q70
1
183
183
Total
52
1,326
6,933
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