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Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under FIFO, LIFO, and Weighted Average Cost (Periodic Inventory)
| Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July. |
| Units | Unit Cost | ||||||
| July 1 | Beginning Inventory | 2,000 | $ | 40 | |||
| July 5 | Sold | 1,000 | |||||
| July 13 | Purchased | 6,000 | 44 | ||||
| July 17 | Sold | 3,000 | |||||
| July 25 | Purchased | 8,000 | 50 | ||||
| July 27 | Sold | 5,000 | |||||
Expert Answer
Units in Beginning Inventory = 2,000
Number of units purchased = 6,000 + 8,000
Number of units purchased = 14,000
Number of units sold = 1,000 + 3,000 + 5,000
Number of units sold = 9,000
Number of units Available for Sale = Units in Beginning Inventory + Number of units purchased
Number of units Available for Sale = 2,000 + 14,000
Number of units Available for Sale = 16,000
Units in Ending Inventory = Number of units Available for Sale – Number of units Sold
Units in Ending Inventory = 16,000 – 9,000
Units in Ending Inventory = 7,000
Cost of Goods Available for Sale = 2,000 * $40 + 6,000 * $44 + 8,000 * $50
Cost of Goods Available for Sale = $744,000
LIFO:
Cost of Goods Sold = 8,000 * $50 + 1,000 * $44
Cost of Goods Sold = $444,000
Ending Inventory = 5,000 * $44 + 2,000 * $40
Ending Inventory = $300,000
FIFO:
Cost of Goods Sold = 2,000 * $40 + 6,000 * $44 + 1,000 * $50
Cost of Goods Sold = $394,000
Ending Inventory = 7,000 * $50
Ending Inventory = $350,000
Weighted-average Cost:
Cost of Goods Available for Sale = $744,000
Number of units Available for Sale = 16,000
Weighted Average Cost per unit = $744,000 / 16,000
Weighted Average Cost per unit = $46.50
Cost of Goods Sold = 9,000 * $46.50
Cost of Goods Sold = $418,500
Ending Inventory = 7,000 * $46.50
Ending Inventory = $325,500
