Question

Lisa Company uses the periodic inventory system and had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Lisa had 80 units in ending inventory.

Required:

a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers to 0 decimal places, e.g. 1,250.)

Answer 1

FIFO $10,400

LIFO $8,000

AVERAGE COST $9,600

Step-by-step explanation:

Lisa Company

(1) FIFO

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

Units sold during the period = 220

Cost of units sold

=100*$100+120*130=$25,600

Value of ending inventory

=10,000+26,000-25,600

=$10,400

(2) LIFO

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

Units sold during the period = 220

Cost of units sold

=20*$100+200*130=$28,000

Value of ending inventory

=10,000+26,000-28,000

=$8,000

(3) average-cost

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

average cost per unit

=(10,000+26,000)/300

=$120 per unit

Units sold during the period = 220

Cost of units sold

=220 * $120

=$26,400

Value of ending inventory

=36,000-26,400

=$9,600