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Inventory by Three Methods The units of an item available for sale during the year were...

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Accounting

Inventory by Three Methods

The units of an item available for sale during the year were asfollows:

Jan.1  Inventory17 units @ $38 per unit
Feb. 17  Purchase4 units @ $40 per unit
Jul. 21  Purchase11 units @ $42 per unit
Nov. 23  Purchase12 units @ $44 per unit

There are 22 units of the item in the physical inventory atDecember 31. The periodic inventory system is used.

Determine the inventory cost under each of the followingmethods.

a. Determine the inventory cost by thefirst-in, first-out method.
$

b. Determine the inventory cost by the last-in,first-out method.
$

c. Determine the inventory cost by the averagecost method. When computing your answer, round the average cost perunit to the nearest whole dollar.
$

Answer & Explanation Solved by verified expert
4.5 Ratings (580 Votes)

Answer = A)
FIFO METHOD
PURHASES COST OF GOODS SOLD CLOSING BALANCE
Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost
Jan , 01 Opening Inventory 17 $38 $646
Add:
Feb , 17 Purchases 4 $40 $160
July, 21 Purchases 11 $42 $462
Nov, 323 Purchases 12 $44 $528
Total Units Available 44 $1,796
Sales (44 units - 22 Units) 17 $38 $646
4 $40 $160
1 $42 $42 10 $42 $420
12 $44 $528
22 $848 22 $948
Answer = B)
LIFO METHOD
PURHASES COST OF GOODS SOLD CLOSING BALANCE
Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost
Jan , 01 Opening Inventory 17 $38 $646
Add:
Feb , 17 Purchases 4 $40 $160
July, 21 Purchases 11 $42 $462
Nov, 323 Purchases 12 $44 $528
Total Units Available 44 $1,796
Sales (44 units - 22 Units) 12 $44 $528
10 $42 $420 1 $42 $42
4 $40 $160
17 $38 $646
22 $948 22 $848
Answer = C)
Average Cost Method
PURHASES COST OF GOODS SOLD CLOSING BALANCE
Date Particulars Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost Units (A) Rate Per unit Total Cost
Jan , 01 Opening Inventory 17 $38 $646
Add:
Feb , 17 Purchases 4 $40 $160
July, 21 Purchases 11 $42 $462
Nov, 323 Purchases 12 $44 $528
Total Units Available 44 $41 $1,796
Sales (44 units - 22 Units) $898 22 $41 $902
22 $41 $902
22 $902 22 $902

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