Textbook Problem

Periodic inventory by three methods

Dymac Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, purchases invoices during the next 12 months, and the inventory count at December 31 are summarized as follows:

		Purchases Invoices
Model	Inventory, January 1	1 st	2nd	3rd	Inventory Count, December 31
A10	–	4 at $ 64	4 at $ 70	4 at $ 76	6
B15	8 at $176	4 at 158	3 at 170	6 at 184	8
E60	3 at 75	3 at 65	15at 68	9 at 70	5
G83	7 at 242	6 at 250	5 at 260	10 at 259	9
J34	12 at 240	10 at 246	16 at 267	16 at 270	15
M90	2 at 108	2 at 110	3 at 128	3 at 130	5
Q70	5 at 160	4 at 170	4 at 175	7 at 180	8

Instructions

1. 1. Determine the cost of the inventory on December 31 by the first-in, first-out method. Present data in columnar form, using the following headings:

   

   If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.

2. 2. Determine the cost of the inventory on December 31 by the last-in, first-out method, following the procedures indicated in (1).
3. 3. Determine the cost of the inventory on December 31 by the weighted average cost method, using the columnar headings indicated in (1).
4. 4. Discuss which method (F1FO or LIFO) would be preferred for income tax purposes in periods of (A) rising prices and (B) declining prices.