Zippy Shoe Co. uses a periodic inventory system. Zippy purchased 400 pairs of shoes at $62 each in June, 975 pairs in August at $64 each, and 600 pairs in December at $67 each. Zippy sold 1,870 pairs of shoes during the year.
Required:
Calculate the company's ending inventory and cost of goods sold using each of the following inventory costing methods.
1. FIFO
2. LIFO
3. Weighted Average

1. Cost of goods sold=   $120,365

Ending inventory= (600- 495) *$67= $7035

2. Cost of goods sold=   $120,890

Ending inventory= (400-295)* $62= $6,510

3. Cost of goods sold= 1,870* 64.5= $120,615

Ending inventory= (1,975- 1,870) * 64.5= $6772.5

Explanation:

1. FIFO

Units              Units Cost               Total cost  

400                    $62                            $24,800

975                     $64                            $62,400

495                     $67                            $33,165

                     Cost of goods sold=   $120,365

Ending inventory= (600- 495) *$67= $7035

2. LIFO

Units              Units Cost               Total cost  

600                   $67                            $40,200

975                   $64                            $62,400

295                   $62                            $18,290

                    Cost of goods sold=   $120,890

Ending inventory= (400-295)* $62= $6,510

3. Weighted average

Unite available for sale= 400+975+600= 1,975

Units sold= 1,870

Average cost per unit= = = = 64.5

Cost of goods sold= 1,870* 64.5= $120,615

Ending inventory= (1,975- 1,870) * 64.5= $6772.5

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