The units of an item available for sale during the year were as follows: Jan 1 i
ID: 2442742 • Letter: T
Question
The units of an item available for sale during the year were as follows:Jan 1 inventory 42 units at $60
Mar 10 purchase 58 units at $65
Aug 30 purchase 20 units at $68
Dec 12 Purchase 30 units at $70
There are 36 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, presenting your answers in the following form:
Inventory Method Merchandise Inventory Merchandise Sold
a. first-in, first out $ $
b. Last in first out
c. Average cost
Explanation / Answer
Units Unit cost Total 1-Jan 42 60 2520 10-Mar 58 65 3770 30-Aug 20 68 1360 12-Dec 30 70 2100 Total 150 9750 Average cost = 9750/150= $65 a. first-in, first out Merchandise Inventory 2508 =(30*70)+(6*68) Merchandise Sold 7242 =9750-2508 b. Last in first out Merchandise Inventory 2160 =(36*60) Merchandise Sold 7590 =9750-2160 c. Average cost Merchandise Inventory 2340 =(36*65) Merchandise Sold 7410 =9750-2340
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