# (Solved Homework): Practice 9 – 7 Inventory Valuation: FIFO, LIFO and AVERAGE…

Practice 9 – 7 Inventory Valuation: FIFO, LIFO and AVERAGE

The company reported the following inventory data for the year:

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(Solved Homework): Practice 9 – 7 Inventory Valuation: FIFO, LIFO and AVERAGE…
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 Description Units Cost per Unit Beginning inventory 300 \$17.50 Purchases: March 23 900 \$18.00 September 16 1,200 \$18.25 Units remaining at year-end 400

Compute (1) cost of goods sold and (2) ending inventory assuming (a) FIFO inventory valuation, (b) LIFO inventory valuation, and (c) average cost inventory valueation. The company uses a periodic inventory system.

QUESTION 2: Inventory Valuation: FIFO, LIFO and AVERAGE (refer to Practice 9-7)

Compute the ending inventory assuming the following methods:

a. FIFO inventory valuation

b. LIFO inventory valuation

c. Average Cost Inventory valuation

The company uses a periodic inventory system.

Submit your answer in the assignment section by 11:59pm Sunday, Week 3.

FIFO:

Beginning Inventory = 300 units
Number of units purchased = 900 + 1,200
Number of units purchased = 2,100

Number of units available for sale = Beginning Inventory + Number of units purchased
Number of units available for sale = 300 + 2,100
Number of units available for sale = 2,400

Ending Inventory = 400 units

Number of units sold = Number of units available for sale – Ending Inventory
Number of units sold = 2,400 – 400
Number of units sold = 2,000

Cost of Goods Sold = 300*\$17.50 + 900*\$18.00 + 800*\$18.25
Cost of Goods Sold = \$36,050

Ending Inventory = 400*\$18.25
Ending Inventory = \$7,300

LIFO:

Beginning Inventory = 300 units
Number of units purchased = 2,100
Number of units available for sale = 2,400
Ending Inventory = 400 units
Number of units sold = 2,000

Cost of Goods Sold = 1,200*\$18.25 + 800*\$18.00
Cost of Goods Sold = \$36,300

Ending Inventory = 300*\$17.50 + 100*\$18.00
Ending Inventory = \$7,050

Average Cost Inventory:

Beginning Inventory = 300 units
Number of units purchased = 2,100
Number of units available for sale = 2,400

Cost of Beginning Inventory = 300*\$17.50
Cost of Beginning Inventory = \$5,250

Cost of Goods Purchased = 900*\$18.00 + 1,200*\$18.25
Cost of Goods Purchased = \$38,100

Cost of Goods available for sale = Cost of Beginning Inventory + Cost of Goods Purchased
Cost of Goods available for sale = \$5,250 + \$38,100
Cost of Goods available for sale = \$43,350

Cost per unit = Cost of Goods available for sale / Number of units available for sale
Cost per unit = \$43,350 / 2,400
Cost per unit = \$18.0625

Cost of Goods Sold = 2,000*\$18.0625
Cost of Goods Sold = \$36,125

Ending Inventory = 400*\$18.0625
Ending Inventory = \$7,225

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