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 @ $102
Mar. 10	Purchase	50 units @ $114
Aug. 30	Purchase	30 units @ $122
Dec. 12	Purchase	70 units @ $128

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.

Answer 1

	Units	Unit cost	Total
Jan. 1	50	102	5100
Mar 10	50	114	5700
Aug. 30	30	122	3660
Dec. 12	70	128	8960
Total	200		23420
Average cost per unit	117.1	=23420/200
First-in, First-out (FIFO):
Merchandise inventory	10180	=(70*128)+(80-70)*122
Merchandise sold	13240	=23420-10180
Last-in, First-out (LIFO):
Merchandise inventory	8520	=(50*102)+(80-50)*114
Merchandise sold	14900	=23420-8520
Weighted Average cost:
Merchandise inventory	9368	=80*117.1
Merchandise sold	14052	=23420-9368