Young Company uses the periodic inventory system to account for inventories. Inf

Question

Young Company uses the periodic inventory system to account for inventories. Information related to Young Company's inventory at October 31 is given below: October 1 Beginning inventory 400 units @ $10.00 = $ 4,000 8 Purchase 800 units @ $10.40 = 8,320 16 Purchase 600 units @ $10.80 = 6,480 24 Purchase 200 units @ $11.60 = 2,320 Total units and cost 2,000 units $21,120 Instructions 1. Show calculations to value the ending inventory using the FIFO cost assumption if 500 units remain on hand at October 31. 2. Show calculations to value the ending inventory using the weighted average cost method if 500 units remain on hand at October 31. 3. Show calculations to value the ending inventory using the LIFO cost assumption if 500 units remain on hand at October 31.

Explanation / Answer

1. Show calculations to value the ending inventory using the FIFO cost assumption if 500 units remain on hand at October 31

Ending inventory under FIFO = (200*11.60+300*10.80) = 5560

2. Show calculations to value the ending inventory using the weighted average cost method if 500 units remain on hand at October 31

Ending inventory under Weighted average = (21120/2000*500) = 5280

3. Show calculations to value the ending inventory using the LIFO cost assumption if 500 units remain on hand at October 31.

Ending inventory under LIFO = (400*10+100*10.40) = 5040

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