Answer:
1. Ending inventory = $339.90
2. Ending inventory = $300
Explanation:
Periodic Inventory System:
The period inventory system is one that only updates the ending inventory balance in the general ledger when a physical count is conducted. This means that these counts are conducted only periodically because they are time consuming.
All purchases made between physical counts are recorded in the purchases account, and when the next physical count is conducted, the balance in the purchases account is moved into the inventory account.
1. Weighted Average method:
This method is used to assign an average cost to inventory. To determine the closing value of inventory, we add opening inventory units and purchases units and subtract sales units. This value is multiplied by the average cost.
Periodic weighted average Inventory on Hand
# of units Cos per unit
($) Inventory value
Purchase- December 7 10 6 $60
Purchase- December 14 20 12 $240
Purchase- December 21 15 14 $210
Available for Sale 45 11.33 $510
December sales 15 11.33 $170
Ending inventory 30 11.33 $339.90
1. Specific identification method:
This method is used to find the ending inventory value. Unlike the weighted average method, this method assigns the exact cost that was paid upon purchase. The entity usually conducts the count to know exactly how many of a specific type of good is on hand. This method is used to track individual items.
Specific identification Inventory on Hand
# of units Cost per unit
($) Inventory value
Purchase- December 7 10 6 $60
Purchase- December 14 20 12 $240
Purchase- December 21 15 14 $210
Available for Sale 45 $510
December sales 10 6 $60
5 12 $60
Total $120
Ending inventory 15 12 $180
15 14 $210
Total 16 $300
