Beginning inventory, purchases, and sales for an inventory item are as follows:

Question

Beginning inventory, purchases, and sales for an inventory item are as follows:

Purchases Cost of Goods Sold Inventory

Event Unit Cost Total Cost Unit Cost Total Cost Total Cost QTY Bought Qty sold Qty Unit Cost

Beginning Inventory 150 755

First Sale 120

First Purchase 400 785

Second Sale 200

Second Purchase 300 805

Sale 290

The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year

A. What is the total cost of ending inventory according to FIFO?

B. What is the cost of ending inventory according to LIFO?

C. What is the cost of ending inventory using weighted average cost. Round to the nearest dollar.

Explanation / Answer

A. What is the total cost of ending inventory according to FIFO?

Answer is 240*805 =193200

Workings

2

Answer is 187700

workings

3

Answer is 190898.99

FIFO Method Purchase Cost of goods sold Closing Stock Particulars Unit Rate Amount Unit Rate Amount Unit Rate Amount Beg inventory 150 755 113250 First Sale 120 755 90600 30 755 22650 First Purchase 400 785 314000 30 755 22650 400 785 314000 Second Sale 30 755 22650 170 785 133450 230 785 180550 Second Purchase 300 805 230 785 180550 300 805 241500 Sale 230 785 180550 60 785 241500 240 805 193200

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