The units of an item available for sale during the year were asfollows: Jan.1 In
ID: 2457620 • Letter: T
Question
The units of an item available for sale during the year were asfollows:
Jan.1 Inventory 18 units at $40
Feb.26 Purchase 36 units at $46
June18 Purchase 42 units at $52
Dec.29 Purchase 24 units at $55
There are 33 units of the item in the physical inventoryat December 31. The periodic inventory system isused. Determine the inventory cost by (a) the first-in,first-out method, (b) the last-in, first-out method, and (c) theaverage cost method.
Explanation / Answer
FIFO Jan 1 Beg inventory 18 units @40 720 Feb 26 Purchases 36 units @46 1,656 June 18 Purchases 42 units @52 2,184 Dec 29 Purchases 24 units @55 1,320 Cost of goods available forsale 5,880 - ending inventory (24+9=33) 9 units @52 24 units @55 1,788 Inventorycost 4,092 LIFO Cost of goodsavailable 5,880 -ending inventory 15 units @ 46 18 units @40 1,410 Inventorycost 4,470 Average cost method Average cost = cost of goods available for sale Total no.of units = 5,880 120 = $ 49.00 Inventory cost calculation Cost of goods available forsale 5,880 - ending inventory 33units @49 1,617 Inventorycost 4,263
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