PE 7-4B Periodic inventory using FIFO, LIFO, average cost methods

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

Jan. 1 Inventory 10 units at $120 $ 1,200
Apr. 13 Purchase 130 units at $114 14,820
Sept. 30 Purchase 20 units at $119 2,380
Available for sale 160 units $18,400

There are 23 units of the item in the physical inventory at December 31. The periodic
inventory system is used. Determine the inventory cost using (a) the first-in, first-out
(FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the average cost method.

Answer:
a. First-in, first-out (FIFO) method: $2,722 = (20 units × $119) + (3 units × $114)  
b. Last-in, first-out (LIFO) method: $2,682 = (10 units × $120) + (13 units × $114)  
c. Average cost method: $2,645 (23 units × $115), where average cost = $115 = $18,400/160 units

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