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27 October, 19:32

The units of an item available for sale during the year were as follows: Jan. 1 Inventory 30 units at $110 Mar. 10 Purchase 60 units at $120 Aug. 30 Purchase 10 units at $124 Dec. 12 Purchase 100 units at $128 There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Inventory and Cost of Goods Sold:

Inventory Method Ending Inventory Cost of Goods Sold

First-in, first-out (FIFO) $ $

Last-in, first-out (LIFO)

Weighted average cost

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  1. 27 October, 19:44
    0
    Concept/Method W-A FIFO LIFO

    Ending Inventory $ 14,280 10,240 9,300

    COGS $ 21,420 25,460 26,400

    Explanation:

    First, we calcualte the goods available for sale through the year:

    Jan. 1 Inventory 30 units at $110 = 3,300

    Mar. 10 Purchase 60 units at $120 = 7,200

    Aug. 30 Purchase 10 units at $124 = 12,400

    Dec. 12 Purchase 100 units at $128 = 12,800

    Goods Available: 200 units Cost: 35,700

    Weighted average:

    we divide the cost of goods available over the units:

    35,700 / 200 = 178.5

    Then we multiply for COGS and EI

    120 units x $ 178.5 = $ 21,420 COGS

    80 units x $ 178.5 = $ 14,280 Ending Inventory

    FIFO

    The first untis (oldest) are COGS and the last are inventory.

    we determinate the ending inventory from the last row:

    Dec. 12 Purchase 100 units at $128 = 12,800

    On ending inventory there is 80 units so:

    80 units x 128 = 10,240

    Then COGS will be the diffrence between cost of good available and ending inventory:

    35,700 - 10,240 = 25,460

    LIFO

    the last units (newest) are COGS and the first are inventory

    we determinate the ending inventory from the first row:

    Jan. 1 Inventory 30 units at $110 = 3,300

    Ending invenotory 80 units - 30 units = 50 more units

    we "grab" one more row:

    Mar. 10 Purchase 60 units at $120 = 7,200

    from we he need 50 units at 120

    so ending inventory is:

    30 units at $ 110 = 3,300

    50 units at $ 120 = 6,000

    Total 9,300

    Then, COGS is calculated by dfference like FIFO:

    35,700 availalbe goods - 9,300 ending inventory = 26,400
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