Question

Item4 3 points eBookHintPrintReferencesItem 4 Spotter Corporation reported the following for June in its periodic inventory records. Date Description Units Unit Cost Total Cost June 1 Beginning 12 $ 8 $ 96 11 Purchase 38 9 342 24 Purchase 20 11 220 30 Ending 24 Required: Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.

Answer 1

a. FIFO

cost of ending inventory = $256

cost of goods sold = $402

b. LIFO

cost of ending inventory = $204

cost of goods sold = $454

c. Weighted average cost

cost of ending inventory = $225.60

cost of goods sold = $432.40

Step-by-step explanation:

Periodic method means cost of sales and inventory balance are determined at the end of the period.

Step 1 : Units Sold

Units Sold = Units available for Sale - Units in Inventory

= (12 + 38 + 20) - 24

= 46

Step 2 : FIFO

FIFO assumes that the units to arrive first, will be sold first.

cost of ending inventory = 20 x $11 + 4 x $9 = $256

cost of goods sold = 12 x $8 x 34 x $9 = $402

Step 3 : LIFO

LIFO assumes that the units to arrive last, will be sold first.

cost of ending inventory = 12 x $9 + 12 x $8 = $204

cost of goods sold = 20 x $11 x 26 x $9 = $454

Step 4 : Weighted average cost

Weighted average cost method calculates a new unit cost with every purchase made. this unit cost is then used to calculated cost of sale and ending inventory.

Unit Cost = Total Costs ÷ Units available for sale

= (12 x $8 + 38 x $9 + 20 x $11 ) ÷ (12 + 38 + 20)

= $9.40

cost of ending inventory = Units in Inventory x Unit Cost

= 24 x $9.40

= $225.60

cost of goods sold = Units Sold x Unit Cost

= 46 x $9.40

= $432.40