Question

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.

$

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