Question

Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:

	Units	Unit Cost
Inventory, December 31, prior year	1,970		$	4
For the current year:
Purchase, March 21	5,180			6
Purchase, August 1	2,850			7
Inventory, December 31, current year	4,060

Required:

Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.)

Answer 1

	Units	Unit cost	Total
Inventory, December 31	1970	4	7880
Purchase, March 21	5180	6	31080
Purchase, August 1	2850	7	19950
Total	10000		58910
FIFO:
Ending inventory	27210	=(2850*7)+(1210*6)
Cost of goods sold	31700	=58910-27210
LIFO:
Ending inventory	20420	=(1970*4)+(2090*6)
Cost of goods sold	38490	=58910-20420
Average cost:
Average cost = 58910/10000 = $5.89
Ending inventory	23913	=4060*5.89
Cost of goods sold	34997	=58910-23913