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6 October, 05:58

The units of an item available for sale during the year were as follows: Jan. 1 Inventory 15 units at $29 $435 Aug. 7 Purchase 17 units at $30 510 Dec. 11 Purchase 15 units at $31 465 47 units $1,410 There are 16 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

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  1. 6 October, 06:10
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    (a) $496

    (b) $945

    (c) $480

    Explanation:

    Jan 1, Inventory = $435

    August 7, Purchase = $510

    December 11, Purchase = $465

    Total units = 47 units

    Total purchase = $1,410

    Average cost = Total purchase : Total units

    = $1,410 : 47 units

    = $30

    Units sold = Total units - Ending inventory

    = 47 - 16

    = 31 units

    (a) FIFO:

    Merchandise inventory = 16 units * $31

    = $496

    (b) LIFO:

    Merchandise inventory = (15 units * $29) + (17 units * $30)

    = $435 + $510

    = $945

    (c) Weighted average cost method:

    Merchandise inventory:

    = Ending inventory * Average cost

    = 16 units * $30

    = $480
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