Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for...

Periodic Inventory by Three Methods; Cost of Merchandise Sold

The units of an item available for sale during the year were as follows:

Jan. 1 Inventory 50 units @ $116
Mar. 10 Purchase 60 units @ $126
Aug. 30 Purchase 20 units @ $130
Dec. 12 Purchase 70 units @ $136

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method Merchandise Inventory Merchandise Sold
First-in, first-out (FIFO) $ $
Last-in, first-out (LIFO)
Weighted average cost

Lower-of-Cost-or-Market Method

On the basis of the data shown below:

Item Inventory
Quantity
Cost per
Unit
Market Value per Unit
(Net Realizable Value)
CK3J 92 $53 $56
TX24 185 25 22

Determine the value of the inventory at the lower of cost or market by applying lower of cost or market to each inventory item, as shown in Exhibit 9.

$

Homework Answers

Answer #1

1) Calculate following

Unit Unit Cost Total Cost
Beginning inventory 50 116 5800
Purchase 1 60 126 7560
Purchase 2 20 130 2600
Purchase 3 70 136 9520
Total 200 25480

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method Merchandise Inventory Merchandise Sold
First-in, first-out (FIFO) $2600+9520+1260 = 13380 $25480-13380 = 12100
Last-in, first-out (LIFO) 5800+30*126 = 9580 25480-9580 = 15900
Weighted average method 25480/200*80 = 10192 25480-10192 = 15288

2) Lower-of-Cost-or-Market Method

Inventory qty Cost per unit Market value per Unit Lower of cost or NRV
CK3J 92 53 56 92*53 = 4876
TX24 185 25 22 185*22 = 4070
Total 8946
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