The following lots of a particular commodity were available for sale during the

ID: 2564869 • Letter: T

Question

The following lots of a particular commodity were available for sale during the year

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.

Calculate Ending Inventory and Cost of Goods sold for the following methods:

A. weighted average

B. FIFO

C. LIFO

Beginning inventory 10 units at $60 First purchase 25 units at $65 Second purchase 30 units at $68 Third purchase 15 units at $75

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.

Calculate Ending Inventory and Cost of Goods sold for the following methods:

A. weighted average

B. FIFO

C. LIFO

Ending inventory (in units) = 25 units

Units sold = Units available for sale - Ending inventory (in units) = 80-25 = 55 units

A. Weighted average:-

Weighted average cost per unit = Cost of goods available for sale ÷ Units available for sale = 5,390÷80 = $67.375

Cost of goods sold = Units sold × Weighted average cost per unit = 55×67.375 = $3,705.625 = 3,705.63

Ending inventory = Cost of goods available for sale - Cost of goods sold = 5,390-3,705.63 = $1,684.37

B. FIFO:-

Cost of goods sold = 10 units @ $60 + 25 units @ $65 + 20 units @ $68 = 600+1,625+1,360 = $3,585

Ending inventory = Cost of goods available for sale - Cost of goods sold = 5,390-3,585 = $1,805

C. LIFO:-

Cost of goods sold = 15 units @ $75 + 30 units @ $68 + 10 units @ $65 = 1,125+2,040+650 = $3,815

Ending inventory = Cost of goods available for sale - Cost of goods sold = 5,390-3,815 = $1,575

Beginning inventory 10 units First purchase 25 units Second purchase 30 units Third purchase 15 units Units available for sale 80 units

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