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Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows:

Jan. 1 Inventory 40 units at $165 $6,600
Aug. 13 Purchase 200 units at $180 $36,000
Nov. 30 Purchase 60 units at $200 $12,000
Available for sale 300 units $54,600

There are 75 Units of the item in the physical inventory at December 31. The periodic inventory system is used.
Determine the inventory cost using the (a) first-in, first-out (FIFO) method; (b) last-in, first-out (LIFO) method; and (c) weighted average cost method.

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Jan. 1: Inventory 40 units at $165

Aug. 13: Purchase 200 units at $180

Nov. 30: Purchase 60 units at $200

Available for sale 300 units

There are 75 Units of the item in the physical inventory on December 31.

1) FIFO (first-in, first-out)

The cost of ending inventory is the cost of the last units bought.

Ending inventory= 60*200 + 15*180= $14,700

2) LIFO (last-in, first-out)

The cost of the ending inventory is the cost of the first units bought.

Ending inventory= 40*165 + 35*180= $12,900

3) Weighted-average:

Weighted average price= (165 + 180 + 200)/3= 181.67

Ending inventory= 181.67*75= $13,625.25