Question

Fortune Stores uses the periodic inventory system for its merchandise inventory. The April 1 inventory for one of the items in the merchandise inventory consisted of 120 unites with a unite cost of $330. Transaction for this item during April were as following:

a. Calculate the cost of goods sold and the ending inventory cost for the month of April using the weighted-average cost method. Round your final answer to the nearest dollar.

b. Calculated the cost of goods sold and the ending inventory cost for the month of April using the first-in, first-out method.

c. Calcualted the cost of goods sold and the ending inventory cost for the month of April using the last-in, last-out method.

		Unites	Cost
April 1	Beginning Inventory	120	330
April 9	Purchased	40	345
April 14	Sold (80 unties @ $550)
April 23	Purchased	20	350
April 29	Sold (40 unites @ $550)

Answer 1

Solution:

(a) weighted-average cost per unit = Total cost / total units

= (120 x330 + 40 x345+ 20x 350) / (120 + 40 + 20)

= $60,400 / 180

= $335.56

cost of goods sold = units sold x $335.56 = 120 x $335.56 = $40,267.20

ending inventory cost = units the end x $335.56 = 60x $335.56 = $20,133.60

(b) FIFO method

cost of goods sold = 80 x $330 + 40 x $330 = $39,600

ending inventory cost = 40 x$345 +20 x $350 = $20800

(c) LIFO method

cost of goods sold = 40 x $345 + 40 x $330 + 20 x $350 + 20 x $330 =$40,600

ending inventory cost = 60 x $330 = $19,800