Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold

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

Jan. 1	Inventory	50 units @ $110
Mar. 10	Purchase	60 units @ $120
Aug. 30	Purchase	20 units @ $124
Dec. 12	Purchase	70 units @ $130

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method	Merchandise Inventory	Merchandise Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

Answer 1

	Units	Unit cost	Total cost
Jan. 1	50	110	5500
Mar. 10	60	120	7200
Aug. 30	20	124	2480
Dec. 12	70	130	9100
Total	200		24280
Average cost per unit	121.4	=24280/200
First-in, first-out (FIFO):
Merchandise Inventory	10340	=(70*130)+(80-70)*124
Merchandise Sold	13940	=24280-10340
Last-in, first-out (LIFO):
Merchandise Inventory	9100	=(50*110)+(80-50)*120
Merchandise Sold	15180	=24280-9100
Weighted average cost :
Merchandise Inventory	9712	=80*121.4
Merchandise Sold	14568	=24280-9712