The units of an item available for sale during the year were as follows: Jan. 1 Inventory 15 units at $29 $435 Aug. 7 Purchase 17 units at $30 510 Dec. 11 Purchase 15 units at $31 465 47 units $1,410 There are 16 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 (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

Question

Isla Hood

Business

31 December, 14:05

The units of an item available for sale during the year were as follows: Jan. 1 Inventory 15 units at $29 $435 Aug. 7 Purchase 17 units at $30 510 Dec. 11 Purchase 15 units at $31 465 47 units $1,410 There are 16 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 (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

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Answers (1)

Know the Answer?

Marcelo Robles · Answer 1

(a) $496

(b) $945

(c) $480

Explanation:

Jan 1, Inventory = $435

August 7, Purchase = $510

December 11, Purchase = $465

Total units = 47 units

Total purchase = $1,410

Average cost = Total purchase : Total units

= $1,410 : 47 units

= $30

Units sold = Total units - Ending inventory

= 47 - 16

= 31 units

(a) FIFO:

Merchandise inventory = 16 units * $31

= $496

(b) LIFO:

Merchandise inventory = (15 units * $29) + (17 units * $30)

= $435 + $510

= $945

(c) Weighted average cost method:

Merchandise inventory:

= Ending inventory * Average cost

= 16 units * $30

= $480