Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at $360 $7,200 Aug. 13 Purchase 260 units at $342 88,920 Nov. 30 Purchase 40 units at $357 14,280 Available for sale 320 units $110,400 There are 57 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method. a. First-in, first-out (FIFO) method $ b. Last-in, first-out (LIFO) method $ c. Weighted average cost method $

Answer 1

Answer:

FIFO = $20,094.00

LIFO = $19,854.00

Weighted average cost = $19,665.00

Explanation:

a. The computation of first-in, first-out (FIFO) method is shown below:-

             Details       Units        Cost Per Unit     Total Cost

Jan-01 Opening

              Inventory   20.00      $360.00              $7,200.00

Aug-13 Purchase  260.00   $342.00        $88,920.00

Nov-13 Purchase  40.00   $357.00        $14,280.00

Sales            303.00

Dec-13  Closing Stock

               Aug-13 Lot 17.00         $342.00            $5,814.00

Dec-13  Closing Stock

             Nov-13 Lot   40.00         $357.00           $14,280.00

Total Closing Stock Valuation under FIFO          $20,094.00

b. The computation of  last-in, first-out (LIFO) method is shown below:-

               Details        Units      Cost Per Unit         Total Cost

Jan-01 Opening

Inventory                   20.00        $360.00             $7,200.00

Aug-13    Purchase     260.00     $342.00             $88,920.00

Nov-13    Purchase     40.00        $357.00            $14,280.00

Sales                                             $283.00

Dec-13 Closing Stock

             Aug-13 Lot   37.00           $342.00            $12,654.00

Dec-13 Closing Stock

Jan-01 Lot                  20.00          $360.00            $7,200.00

Total Closing Stock Valuation under LIFO           $19,854.00

c. The computation of Weighted average cost method is shown below:-

                         Details             Units    Cost Per Unit    Total Cost

Jan-01             Opening

                        Inventory         20.00      $360.00         $7,200.00

Aug-13              Purchase        260.00     $342.00          $88,920.00

Nov-13              Purchase         40.00       $357.00          $14,280.00

                      Weighted

                    Average Cost     320.00       $345.00        $1,10,400.00

                               Sales                            $283.00  

Dec-13 Closing Stock

                 Aug-13 Lot               57.00          $345.00       $19,665.00