eBook Periodic Inventory by Three Methods The units of an item available for sal
ID: 2553140 • Letter: E
Question
eBook Periodic Inventory by Three Methods The units of an item available for sale during the year were as follows: Show Me How tor Jan. 1 Inventory Feb. 17 Purchase Jul. 21 Purchase Nov. 23 Purchase 11 units at $31 6 units at $32 7 units at $35 6 units at $37 There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to one decimal and final answers to the nearest whole dollar, if required. a. Determine the inventory cost by the first-in, frst-out method. 607 X b. Determine the inventory cost by the last-in, first-out method. c. Determine the inventory cost by the weighted average cost method. a. Note that this exercise uses the periodic inventory system. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, ending inventory costs for the period are calculated by taking the number of items remaining in the physical Inventory times the most recent purchase price. If the number of items in last purchase layer is less than the number in ending inventory, the balance of the ending inventory items must be recorded at purchase cost. The cost of goods sold for the perlod can be calculated by subtracting the ending inventory from the total the second most recent ilable for saleExplanation / Answer
In FIFO methods inventory purchased first will be sold first.
Cost of ending inventory cost using FIFO will be
(6* 37) + (7* 35) + (5* 32)
222 + 245 + 160
627
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In LIFO methods inventory purchased last will be sold first.
Cost of ending inventory cost using LIFO will be
(11* 31) + (6* 32) + (1* 35)
341 + 192 + 35
568
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Average cost method
Total cost = 11*31 + 32* 6 + 35* 7 + 37*6
= 341 + 192 + 245 + 222
= 1000
Per unit cost = 1000/30 = $33.33 per unit
Cost of ending inventory = 33.33 * 18 = 600
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