Question

The Rock Shop shows the following data related to an item of inventory:

Inventory, January 1 300 units @ $5.00

Purchase, January 9 900 units @ $5.40

Purchase, January 19 210 units @ $6.00

Inventory, January 31 300 units

Required: Please show all calculations

(a) What value should be assigned to the ending inventory using FIFO?

(b) What value should be assigned to cost of goods sold using LIFO?

(c) What value should be assigned to the ending inventory using Weighted Average (round unit cost to nearest penny)?

Answer 1

Requirement a Ending inventory by FIFO	$ 1,746
Requirement b Cost of goods sold by LIFO	$ 6,120
Requirement c Ending inventory by Weighted average	$ 1,620

Working

Average Cost of Inventory
Units	(A)	1410
Total Cost	(B)	$ 7,620
Average Cost	(C=B/A)	$                     5.40

.

FIFO
Total Units Avalable for sale		1410
Units Sold		1110
Closing Stock in Units		300
Valuation
Ending Inventory	210	@	$               6.00	$ 1,260
	90	@	$               5.40	$ 486
Value Of Ending Inventory				$              1,746
Cost of Goods sold				$              5,874
LIFO
Total Units Avalable for sale		1410
Units Sold		1110
Closing Stock in Units		300
Valuation
Ending Inventory	300	@	$               5.00	$ 1,500
	0	@	$             35.00	$ 0
Value Of Ending Inventory				$              1,500
Cost of Goods sold				$              6,120
Weighted Average method
Total Units Avalable for sale		1410
Units Sold		1110
Closing Stock in Units		300
Valuation
Ending Inventory	300	@	$             5.400	$              1,620
Value Of Ending Inventory				$              1,620
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              6,000