XYZ Co uses the periodic inventory system to account for inventories. Its beginning inventory is 500 units at 5 $ each.

Question

XYZ Co uses the periodic inventory system to account for inventories. Its beginning inventory is 500 units at 5 $ each. Information related to XYZ Company's inventory at October 31 is given below: Alpha CO Date Explanation Units Units Cost Total Cost 10/08 Purchase 800 $ 11 10/15 Purchase 600 $ 14 10/20 Purchase 300 $ 15 Total goods available During the year, 1400 units were sold. Required: 1. Compute the cost of ending inventory and the cost of goods sold under: (6 marks) a. FIFO method b. LIFO method c. The weighted average Answer: a. FIFO. (2 marks) Step 1 Ending Inventory Step 2 Cost of Goods Sold b. LIFO. (2 marks) Step 1 Ending Inventory Step 2 Cost of Goods Sold c. Weighted average...

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ANSWER Method Cost of ending inventory Cost of goods sold FIFO method $11,500 $12,700 LIFO method $5,800 $18,400 The weighted average $8,800 $15,400 Working: Date Explanation Units Units Cost Total Cost 10/08 Purchase 800 $11 8,800 10/15 Purchase 600 $14 8,400 10/20 Purchase 300 $15 4,500 Total goods available for sale 1,700 24,200 FIFO Ending Inventory Date Units Per unit cost Total cost 10/15 500 $14 $7,000 10/20 300 $15 $4,500 Ending Inventory = $11,500 Cost of goods sold 1400 units from earliest purchases Date Units Per unit cost Total cost Opening Inventory 500 $5 $2,500 10/08 800 $11 $8,800 10/15 100 $14 $1400 Total Cost of goods sold = $12,700 LIFO Ending Inventory Date Units Per unit cost Total cost Opening Inventory 500 $5 $2,500 10/08 300 $11 $3,300 Ending Inventory = $5,800 Cost of goods sold 1400 units from latest purchase Date Units Per unit cost Total cost 10/20 300 $15 $4,500 10/15 600 $14 $8,400 10/08 500 $11 $5,500 Total Cost of goods sold = $18,400 Weighted Average Total number of units available for sale -: Beg. Inventory (500 units) + Purchases (800 + 600 + 300) = 2,200 units Cost of Units available for sale (Beg. Inventory + Purchases) = 2,500 + 8,800 + 8,400 + 4,500 = $24,200 Therefore, Weighted Average Unit Cost = $24,200 / 2,200 units = $11 per unit COGS = 1400 units X $11 = $15,400 Ending Inventory = 800 units X $11 = $8,800

Method	Cost of ending inventory	Cost of goods sold
FIFO method	$11,500	$12,700
LIFO method	$5,800	$18,400
The weighted average	$8,800	$15,400

Date	Explanation	Units	Units Cost	Total Cost
10/08	Purchase	800	$11	8,800
10/15	Purchase	600	$14	8,400
10/20	Purchase	300	$15	4,500

	Total goods available for sale	1,700		24,200

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XYZ Co uses the periodic inventory system to account for inventories

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