Question

Inventory by Three Methods; Cost of Goods Sold

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

Jan. 1

Inventory

21 units at $1,800

May 15

Purchase

29 units at $1,950

Aug. 7

Purchase

10 units at $2,040

Nov. 20

Purchase

15 units at $2,100

There are 18 units of the item in the physical inventory at December 31.

Determine the cost of ending inventory and the cost of goods sold by three methods, presenting your answers in the following form:

Cost

Inventory Method

Ending Inventory

Cost of Goods Sold

a. First-in, first-out method

$

$

b. Last-in, first-out method

$

$

c. Weighted average cost method

$

$

Answer 1

			Price per unit	Units
01-Jan	Beginning inventory	37800	1800	21
15-May	Purchases	56550	1950	29
07-Aug	Purchases	20400	2040	10
20-Nov	Purchases	31500	2100	15
	Cost of goods available for sale	146250		75
	Average cost	1950.00	Less units sold	57
			Ending inventory	18
	Ending inventory
	Average cost	35100	(18*1950)
	FIFO	Units	Per unit	Total
	20 Nov purchases	15	2100	31500
	7 aug purchases	3	2040	6120
	Total	18		37620
	LIFO
	1 jan purchases	18	1800	32400
	Total	18		32400
		Average	FIFO	LIFO
	Cost of goods available for sale	146250	146250	146250
Less	Ending inventory	35100	37620	32400
	Cost of goods sold	111150	108630	113850