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Homework answers / question archive / Periodic inventory by three methods; cost of goods sold The units of an item available for sale during the year were as follows: Jan
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 30 units at $116 Mar. 10 Purchase 60 units at $128 Aug. 30 Purchase 30 units at $134 Dec. 12 Purchase 80 units at $140 There are 80 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. Cost of Ending Inventory and Cost of Goods Sold Inventory Method Ending Inventory Cost of Goods Sold First-in, first-out (FIFO) $ $ Last-in, first-out (LIFO) Weighted average cost
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Cost of Ending Inventory and Cost of Goods Sold |
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Inventory Method |
Ending Inventory |
Cost of Goods Sold |
|
First -In, First-Out (FIFO) |
$11,200 |
$15,180 |
|
Last-In, First-Out (LIFO) |
$9,880 |
$16,500 |
|
Weighted Average Cost |
$10,552 |
$15,828 |
Explanation:
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Number of units |
Unit cost |
Total cost |
|||
|
1-Jan |
Inventory |
30 |
x |
$116 |
$3,480 |
|
10-Mar |
Purchased |
60 |
x |
$128 |
$7,680 |
|
30-Aug |
Purchased |
30 |
x |
$134 |
$4,020 |
|
12-Dec |
Purchased |
80 |
x |
$140 |
$11,200 |
|
Total |
200 |
$131.9 |
$26,380 |
Number of units sold = Number of units purchased – Number of units in ending inventory
= 200 – 80 = 120
In FIFO inventory system, goods purchase first is consumed first and ending inventory comprises of the latest purchased goods.
Cost of ending inventory = 80 units x $ 140 = $11,200
Cost of goods sold = $3,480 + $7,680 + $4,020 = $15,180
In LIFO inventory system latest purchased goods is used first and goods purchased at starting of the period is left behind as ending inventory.
Cost of ending inventory = (30 units x $ 116) + (50 units x $ 128) = $3,480 + $6,400 = $9,880
Cost of Goods sold = $11,200 + $4,020 + (10 units x $ 128)
= $11,200 + $4,020 + $ 1,280 = $ 16,500
For Weighted Average Cost,
Cost per unit = Total cost/Total number of units = $26,380/200 = $131.9
Cost of ending inventory = 80 units x $131.9 = $10,552
Cost of goods sold = 120 units x $131.9 = $15,828
