The units of an item available for sale during the year were as follows:Jan. 1 Inventory 18 units at $1,440

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


Jan. 1 Inventory 18 units at $1,440
Feb. 17 Purchase 36 units at $1,656
July 21 Purchase 42 units at $1,872
Nov. 23 Purchase 24 units at $1,980


There are 32 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the weighted average cost method.

Answer:

a. $62,496 (24 units at $1,980 plus 8 units at $1,872) = $47,520 + $14,976

b. $49,104 (18 units at $1,440 plus 14 units at $1,656) = $25,920 + $23,184

c. $56,448 (32 units at $1,764; $211,680 ÷ 120 units = $1,764)



Cost of merchandise available for sale:
18 units @ $1,440…………………………………………… $ 25,920
36 units @ $1,656…………………………………………… 59,616
42 units @ $1,872…………………………………………… 78,624
24 units @ $1,980…………………………………………… 47,520
120 units (at an average cost of $1,764)………………… $211,680