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 @ $92
Mar. 10	Purchase	60 units @ $104
Aug. 30	Purchase	20 units @ $112
Dec. 12	Purchase	70 units @ $116

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.

Answer 1

	Units	Unit cost	Total
Jan. 1	50	92	4600
Mar. 10	60	104	6240
Aug. 30	20	112	2240
Dec. 12	70	116	8120
Total	200		21200
Average cost = 21200/200 = $106
First-in, first-out (FIFO):
Merchandise Inventory	9240	=(70*116)+(10*112)
Cost of Merchandise Sold	11960	=21200-9240
Last-in, first-out (LIFO) :
Merchandise Inventory	7720	=(50*92)+(30*104)
Cost of Merchandise Sold	13480	=21200-7720
Weighted average cost:
Merchandise Inventory	8480	=80*106
Cost of Merchandise Sold	12720	=21200-8480