Question

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).

Answer 1

(a) $496

(b) $945

(c) $480

Step-by-step 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