Question

# Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for...

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

 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