Periodic Inventory by Three Methods; Cost of Merchandise SoldThe units of an item available for sale during the year were as follows:Jan. 1Inventory50 units @ $106Mar. 10Purchase60 units @ $118Aug. 30Purchase20 units @ $122Dec. 12Purchase70 units @ $124There are 80 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.  Cost of Merchandise Inventory and Cost of Merchandise SoldInventory MethodMerchandise InventoryMerchandise SoldFirst-in, first-out (FIFO)$$Last-in, first-out (LIFO)  Weighted average cost

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Asked Sep 30, 2019
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Periodic Inventory by Three Methods; Cost of Merchandise Sold

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

Jan. 1 Inventory 50 units @ $106
Mar. 10 Purchase 60 units @ $118
Aug. 30 Purchase 20 units @ $122
Dec. 12 Purchase 70 units @ $124

There are 80 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.

 
 
Cost of Merchandise Inventory and Cost of Merchandise Sold
Inventory Method Merchandise Inventory Merchandise Sold
First-in, first-out (FIFO) $ $
Last-in, first-out (LIFO)    
Weighted average cost    
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Expert Answer

Step 1

Compute total units and units sold in the period as shown below:

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Total units 50+60+20+70 =200 units Units sold Total units - Ending units -200 80 =120 Compute cost of merchandise inventory and merchandise sold under FIFO method as shown below Cost of goods sold = (50x $106) +(60x$118)+ (10x $122) $5,300+ S7,080 +$1,220 =S13,600 (10x$122)+(70 x$124) Cost of ending inventory S1,220+S8,680 =S9,900

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Step 2

Compute cost of merchandise inventory and merchandise sold under LIFO method as shown below:

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(30x $118)+ (20x$122) (70x $124) Cost of goods sold S3,540+S2,440+ $8,680 $14,660 Cost of ending inventory = (50xS106)+(30x$118) =S5,300+ $3,540 =S8,840

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Step 3

Compute cost of merchandise inventory and merchandise sold unde...

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Total Units (A) Rate (B)(AxB) $5,300 $7,080 $2,440 S8,680 01-Jan Inventory 10-Mar Purchases 30-Aug Purchases 12-Dec Purchases Total $106 50 $118 60 $122 20 $124 70 200 $23,500 Total cost Weighted average rate Total units $23,500 200 $117.5 Cost of goods sold = Weighted average rate x Units sold =S117.5x120 $14,100 Cost of ending inventory= Weighted average rate x Ending units - $117.5x80 =S9,400

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