Question

The following information pertains to Company A's Year 1 inventory activities:

Date Transaction Number of Units Purchase price per unit Sale price per unit

January 1 Beginning balance 90 $40

April 11 Sale 50 $70

May 15 Purchase 160 $65

July 25 Sale 30 $75

For each of the following independent assumptions regarding Company A's inventory cost flow methods, click on the associated designated cell and enter the applicable dollar value of inventory that would be reported in Company A's December 31, Year 1, balance sheet. Enter all amounts as positive values. Round all amounts to the nearest dollar. If the amount is zero, enter a zero (0).

1. First-in, first-out (FIFO) periodic

2. Moving average

3. Weighted average

4. Last-in, first-out (LIFO) periodic

5. First-in, first-out (FIFO) perpetual

Answer 1

Your Answer

1	First-in, first-out (FIFO) periodic	$        10,800
2	Moving average	$        10,200
3	Weighted average	$          9,520
4	Last-in, first-out (LIFO) periodic	$          8,800
5	First-in, first-out (FIFO) perpetual	$        10,800

Calculation

Total units sold (50+30)			80
Method	First in First out				Periodic System
date	Goods Available for sale			Cost of goods sold			Ending inventory
	Unit	unit cost	value	Unit	unit cost	value	Unit	unit cost	value
Beginning Jan 1	90	40	3,600	80	40	3,200	10	40	400
Purchase May 15	160	65	10,400				160	65	10,400
Total	250		14,000	80		3,200	170		10,800
Method	Last in First out				Periodic System
date	Goods Available for sale			Cost of goods sold			Ending inventory
	Unit	unit cost	value	Unit	unit cost	value	Unit	unit cost	value
Beginning Jan 1	90	40	3,600				90	40	3,600
Purchase May 15	160	65	10,400	80	65	5,200	80	65	5,200
Total	250		14,000	80		5,200	170		8,800

Method	Weighted Average (Periodic System )
date	goods Available for sale
	Unit	unit cost	value
Beginning Jan 1	90	40	3,600
Purchase May 15	160	65	10,400
Total	250		14,000
Cost of Goods Available for sale			14,000
Divided by: Units Available for sale			250
Weighted Average cost per unit			$        56.00
Cost of goods sold	80	$      56.00	$        4,480
Ending inventory	170	$      56.00	$        9,520

First In First Out (FIFO) Method (Perpetual System)
Date	Purchase			Cost of goods sold			Inventory on Hand
	Qty	Price	Value	Qty	Price	Value	Qty	Price	Value
Jan 1							90	40	3600
Apr 11				50	40	2000	40	40	1600
May 15	160	65	10400				40	40	1600
							160	65	10400
July 25				30	40	1200	10	40	400
							160	65	10400
Total				80		3,200	170		10,800

Moving Average Method (Perpetual System)
Date	Purchase			Cost of goods sold			Inventory on Hand
	Qty	Price	Value	Qty	Price	Value	Qty	Price	Value
Jan 1							90	40	3600
Apr 11				50	40	2000	40	40	1600
May 15	160	65	10400				200		12000
Average Cost per unit = 12000/200								60
July 25				30	60	1800	170	60	10200
Total				80		3,800	170		10,200