Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost Inventory, December 31, prior year 1,960 $ 6 For the current year: Purchase, March 21 6,200 5 Purchase, August 1 4,020 3 Inventory, December 31, current year 2,980 Required: Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods

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Business

Giada Stewart

9 April, 03:09

Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost Inventory, December 31, prior year 1,960 $ 6 For the current year: Purchase, March 21 6,200 5 Purchase, August 1 4,020 3 Inventory, December 31, current year 2,980 Required: Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods

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Answers (1)

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Kenzie Rogers · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

Inventory, December 31 = 1,960 units at $ 6

For the current year:

Purchase, March 21 = 6,200 units at $5

Purchase, August 1 = 4,020 units at $3

Inventory, December 31, current year 2,980 units

We need to determine the cost of inventory using the following methods:

LIFO (last-in, first-out)

Inventory = 1,960*6 + 1,020*5 = $16,860

FIFO (first-in, first-out)

Inventory = 2,980*3 = $8,940

Weighted Average:

Average cost = (6 + 5 + 3) / 3 = 4.67

Inventory = 2,980*4.67 = $13,916.6