Question

Inventory by Three Methods The units of an item available for sale during the year were as follows: Jan.1 Inventory 27 units at $400 Feb. 19 Purchase 54 units at $460 June 8 Purchase 63 units at $520 Oct. 7 Purchase 56 units at $550 There are 45 units of the item in the physical inventory at December 31. Determine the cost of ending inventory using (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method. Inventory Cost a. First-in, first-out method $ 24,750 b. Last-in, first-out method $ 19,080 c. Average cost method $ 111,150

Answer 1

Answer:

FIFO Ending Inventory  $ 24750

LIFO Ending Inventory  $ 19080

Average Cost Method Ending Inventory $22,320

Explanation:

Date           Units                  Unit Price           Total Cost

Jan.1 Inventory 27 units           $400                $ 10800

Feb. 19 Purchase 54 units       $460                $ 24840

June 8 Purchase 63 units         $520                $ 32760

Oct. 7 Purchase 56 units          $550                $ 30800

Total             200 units                                             $ 99200      

There are 45 units of the item in the physical inventory at December 31

FIFO Ending Inventory

45 units at $ 550 =  $ 24750

LIFO Ending Inventory  $ 19080

27 units at $ 400= $ 10800

18 units at $ 460=  $ 8280

Average Cost Method Ending Inventory $ 22,320

Units Cost= $ 99200/ 200= $ 496

45 units at $ 496=  22,320