Periodic Inventory by Three Methods Cost of Merchandise Sold

Periodic Inventory by Three Methods; Cost of Merchandise Sold

Determine the inventory cost and the cost of merchandise sold by three methods.

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows an. 1 Inventory Mar. 10 Purchase Aug. 30 Purchase Dec. 12 Purchase There are 60 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. Round interim calculations to one decimal and final answers to the nearest whole dollar. 50 units $116 70 units $124 30 units @ $128 50 units $130 Cost of Merchandise Inventory and Cost of Merchandise Sold Inventory MethodMerchandise Inventory Merchandise Sold First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted average cost

Solution

Cost of Goods available for sale = 50 * $116 + 70 * $124 + 30 * $128 + 50 * $130
Cost of Goods available for sale = $24,820

Number of units available for sale = 50 + 70 + 30 + 50
Number of units available for sale = 200

Number of units in ending inventory = 60
Number of units sold = 140

First-in, First-out:

Cost of Merchandise Inventory = 50 * $130 + 10 * $128
Cost of Merchandise Inventory = $7,780

Cost of Merchandise Sold = Cost of Goods available for sale - Cost of Merchandise Inventory
Cost of Merchandise Sold = $24,820 - $7,780
Cost of Merchandise Sold = $17,040

Last-in, First-out:

Cost of Merchandise Inventory = 50 * $116 + 10 * $124
Cost of Merchandise Inventory = $7,040

Cost of Merchandise Sold = Cost of Goods available for sale - Cost of Merchandise Inventory
Cost of Merchandise Sold = $24,820 - $7,040
Cost of Merchandise Sold = $17,780

Weighted Average Cost:

Cost per unit = Cost of Goods available for sale / Number of units available for sale
Cost per unit = $24,820 / 200
Cost per unit = $124.10

Cost of Merchandise Inventory = 60 * $124.10
Cost of Merchandise Inventory = $7,446

Cost of Merchandise Sold = Cost of Goods available for sale - Cost of Merchandise Inventory
Cost of Merchandise Sold = $24,820 - $7,446
Cost of Merchandise Sold = $17,374