Question

Periodic Inventory by Three Methods

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

Jan. 1	Inventory	1,070 units @ $132
Feb. 17	Purchase	1,410 units @ $134
Jul. 21	Purchase	1,610 units @ $136
Nov. 23	Purchase	1,135 units @ $137

There are 1,210 units of the item in the physical inventory at December 31. The periodic inventory system is used. Do not round intermediate calculation and round final answer to nearest whole value.

a. Determine the inventory cost by the first-in, first-out method.
$

b. Determine the inventory cost by the last-in, first-out method.
$

c. Determine the inventory cost by the weighted average cost method.
$

Answer 1

FIFO method states that goods purchased first are sold first

LIFO method states that goods purchased later are sold first

Weighted average method uses weighted average for the purpose of calculation

Under periodic method, all records are updated at the end of the year

a. Value of Inventory as per FIFO = 1135*137 + 75*136 = $165,695

b.Value as per LIFO = 1070*132 + 140*134 = $160,000

c. Weighted average cost per unit = Total cost of goods available/Total Units

= (1070*132 + 1410*134 + 1610*136 + 1135*137)/5225

= $134.858373205 per unit

Value of Inventory = 1210*134.858373205 = $163,179