Question

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions. Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 The firm uses the periodic inventory system. During the year, 60 units of the item were sold. ​

Answer 1

ending inventory using LIFO = $1,150

ending inventory using FIFO = $1,375

ending inventory using average cost = $1,262.50

Step-by-step explanation:

units purchased unit price total

Beginning inventory 10 units $55 $550

First purchase 25 units $60 $1,500

Second purchase 30 units $65 $1,950

Third purchase 15 units $70 $1,050

total 80 units $63.125 $5,050

If 60 units were sold during the year:

ending inventory using LIFO = (10 x $55) + (10 x $60) = $1,150

ending inventory using FIFO = (15 x $70) + (5 x $65) = $1,375

ending inventory using average cost = 20 x $63.125 = $1,262.50