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	40 units @ $108
Mar. 10	Purchase	60 units @ $120
Aug. 30	Purchase	30 units @ $128
Dec. 12	Purchase	70 units @ $134

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

	Unit	Unit Cost	Total Cost
Beginning inventory	40	108	4320
Purchase	60	120	7200
Purchase	30	128	3840
Purchase	70	134	9380
Total	200		24740

Calculate following :

Inventory Method	Merchandise Inventory	Merchandise Sold
First-in, first-out (FIFO)	(70*134+10*128) = 10660	24740-10660 = 14080
Last-in, first-out (LIFO)	(40*108+40*120) = 9120	24740-9120 = 15620
Weighted average cost	(24740/200)*80 = 9896	24740-9896 = 14844