Compute ending merchandise inventory, cost of goodssold, and gross profit using the (1) FIFO inventory costingmethod, (2) LIFO inventory costing method, and (3) weighted-average inventory costing method. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.) Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.
Requirement 1.
FIFO
Plus:
Less:
Cost of goods sold
Requirement 2.
LIFO
Requirement 3.
Weighted-Average

Additional Information:

June.1 Beginning merchandise inventory 17 units at $15each

      12  Purchase                                          5 units at $19each

      20 Sale                                                 14 units at $37each

     24  Purchase                                         11 units at $23each

     29  Sale                                                 13 units at $37each

a) Ending Merchandise Inventory and Cost of Goods Sold under FIFO:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale              $603

Less Ending Inventory                                  138

Cost of Goods Sold                                  $465

b) Ending Merchandise Inventory and Cost of Goods Sold under LIFO:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale                $603

Less Ending Inventory                                      90

Cost of Goods Sold                                      $513

c) Ending Merchandise Inventory and Cost of Goods Sold under Weighted Average:

Beginning Inventory,  17 units at $15each   $255

Plus Purchases:

 June 12  Purchase, 5 units at $19each         95

 June 24 Purchase, 11 units at $23each      253

Cost of Goods Available for Sale                $603

Less Ending Inventory                                    109.62

Cost of Goods Sold                                    $493.38

2. Ending Inventory = 6 units (17 units + 5 - 14 + 11 - 13)

                                         FIFO                    LIFO             Weighted Average

Ending Inventory value = $23 *6 = $138;  $15 *6 = $90;  $18.27 *6 = $109.62

Weighted Average = Cost of Goods Available for Sale / Quantity Available for Sale = $603/33 = $18.27 per unit

Explanation:

FIFO: First In, First Out:  This is a method of costing inventory which assumes that goods remaining in stock are those that were brought in last.  This means that goods are sold out according to the time they are bought, with earlier bought goods being sold before later bought goods.

LIFO: Last In, First Out:  This costing method assumes that goods that are sold are those that were bought later leaving those bought earlier to remain in stock.  The entity using this method exhausts the last quantity bought before selling the earlier quantities.

Weighted Average: This is another technique which weighs the averages of the cost of inventory before determining the value of inventory.  The weighted average method divides the cost of the goods available for sale by the number of those units still on the shelf.  The result is the weighted average cost per unit, which can be used to assign a cost to both the ending inventory and the cost of goods sold.

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