The units of an item available for sale during the year were as follows:Jan. 1 Inventory 42 units at $720

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


Jan. 1 Inventory 42 units at $720
Mar. 10 Purchase 58 units at $780
Aug. 30 Purchase 20 units at $816
Dec. 12 Purchase 30 units at $840




There are 48 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost and the cost of merchandise sold by three methods, presenting your answers in the following form:


Cost
Inventory Method Merchandise Inventory Merchandise Sold
a. First-in, first-out $ $
b. Last-in, first-out
c. Weighted average cost

Answer:




Inventory Method
Cost
Merchandise
Inventory
Merchandise
Sold
FIFO $39,888 $77,112
LIFO 34,920 82,080
Weighted average cost 37,440 79,560
a.
b.
c.
Cost of merchandise available for sale:
42 units at $720……………………………………………………...…………… $ 30,240
58 units at $780………………………………………………...……………… 45,240
20 units at $816………………………………………………………..………… 16,320
30 units at $840………………………………………………….……………… 25,200
150 units (at an average cost of $780)……………………………………… $117,000
a. First-in, first-out:
Merchandise inventory:
30 units at $840…………………………………………………..…………… $25,200
18 units at $816………………………………………...……………………… 14,688
48 units……………………………………………………..…………………… $39,888
Merchandise sold:
$117,000 – $39,888…………………………………….………………………… $77,112
b. Last-in, first-out:
Merchandise inventory:
42 units at $720……………………………………………...………………… $30,240
6 units at $780………………………………………….……………………… 4,680
48 units…………………………………………………………...……………… $34,920
Merchandise sold:
$117,000 – $34,920……………………………………………..………………… $82,080
c. Weighted average cost:
Merchandise inventory:
48 units at $780 ($117,000 ÷ 150 units)………………………………………… $37,440
Merchandise sold:
$117,000 – $37,440…………………………………...…………………………… $79,560