Question

Beginning inventory, purchases, and sales data for May are as follows:

            May   1          Inventory                                            40 units at $10

                        4          Purchase                                              30 units at $12

12        Purchase                                            45 units at $15

                       

The business maintains a periodic inventory system. Assume 60 units were sold during the month.

Required

Part 1) Determine the COST OF GOODS SOLD under each of the following methods:

A)First-in first-out (FIFO)

B)Last-in first-out (LIFO)

C)Weighted-average

Part 2) Determine the ENDING INVENTORY under each of the following methods:

A)First-in first-out (FIFO)

B)Last-in first-out (LIFO)

C)Weighted-average

Answer 1

Part 1

A) Cost of goods sold under FIFO method = 40*10 +20*12 =640

B) Cost of goods sold under LIFO method = 45*15 +15*12 =855

C) Cost of goods sold under WA method = (40*10 +30*12 + 45*15)/(40+30+45)*60 = 748.69

Part 2

Ending inventory = 40+30+45 -60 = 55 units

A) Cost of ending inventory under FIFO method = 10*12 +45*15 =795

B) Cost of ending inventory under LIFO method = 15*12 +40*10 =580

C) Cost of ending inventory under WA method = (40*10 +30*12 + 45*15)/(40+30+45)*55 = 686,30