When we sell identical goods, we can choose from several inventory costing methods when calculating Cost of Goods Sold and Ending Inventory.

Concept #1: Periodic Inventory: FIFO, LIFO, and Average Cost

Example #1: Periodic Inventory FIFO Method

Example #2: Periodic Inventory LIFO Method

Example #3: Periodic Inventory Average Cost Method

Additional Problems
Assume that cost of goods sold is $195,000, and ending inventory is $55,000 for a company using the FIFO method. If ending inventory for the same period for the same company is $65,000 under the LIFO method, how much is cost of goods sold under the LIFO method? a. $185,000 b. $195,000 c. $205,000 d. cannot be determined from just the information given
Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. Sales during the year were 2,700 units at $5.00. If Hefty used the first-in, first-out method, ending inventory would be: a. $2,780 b. $3,960 c. $9,700 d. $10,880
Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be: a. $2,780 b. $3,960 c. $9,700 d. $10,880
Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year. Sales during the year were 2,700 units at $5.00. If Hefty used the weighted-average method, Cost of Goods Sold would be: a. $3,255 b. $3,415 c. $10,245 d. $13,500
Iron Co. has the following data related to an item of inventory: Inventory, March 1                                        100 units @ $4.20 Purchase, March 7                                        350 units @ $4.40 Purchase, March 16                                      70 units @ $4.50 Inventory, March 31                                       150 units The value assigned to ending inventory if Iron uses LIFO is a. $667. b. $640. c. $630. d. $675.
Iron Co. has the following data related to an item of inventory: Inventory, March 1                                        100 units @ $4.20 Purchase, March 7                                        350 units @ $4.40 Purchase, March 16                                      70 units @ $4.50 Inventory, March 31                                       150 units The value assigned to cost of goods sold if Iron uses FIFO is a. $667. b. $640. c. $1,635. d. $1,608.
Consider the following: Determine the value of the ending merchandise inventory. a. $10,000 b. $15,000 c. $ 5,000 d. $25,000
Consider the following: Eighty-three units were sold. What is the value assigned to the ending inventory using the FIFO method of inventory costing? a. $5,000 b. $30,000 c. $35,000 d. $10,000
Consider the following: There were 105 units available at a total cost of $1,225. Eighty-three units were sold. Use the LIFO method of inventory costing and determine the cost of goods sold. a. $993 b. $968 c. $962 d. $941
Which of the following is true during periods of rising prices? a. The use of FIFO will result in smaller net income than LIFO. b. The use of FIFO will result in a larger cost of goods sold than LIFO. c. The use of LIFO will result in a smaller cost of goods sold than FIFO. d. The use of FIFO will result in a higher net income and higher ending inventory than LIFO.
The amount of purchases of merchandise inventory during the period is a. only accumulated in a separate account under the periodic inventory system. b. always accumulated in a separate account in the accounting system. c. only accumulated in a separate account under the perpetual inventory system. d. always recorded at average prices.
ABC Company employs a periodic inventory system and sells its inventory to customers for $15 per unit. ABC Company had the following inventory information available for the month of May: Calculate the dollar amount of  ending inventory shown on ABC Company's May 31 balance sheet using the weighted average method.
ABC Company employs a periodic inventory system and sells its inventory to customers for $15 per unit. ABC Company had the following inventory information available for the month of May: Calculate the amount of  net income reported on ABC Company's income statement for May using the LIFO method.
Maxell Company uses the FIFO method to value inventory and had the following transactions in the period. What are Maxell’s cost of goods sold and ending inventory balance in dollars for the period? a. COGS - $625; Ending Inventory - $175 b. COGS - $575; Ending Inventory -  $225 c. COGS - $550; Ending Inventory - $250 d. COGS - $600; Ending Inventory - $200 e. None of the above is correct.
Lauer Corporation uses the periodic inventory system and the following information about their laptop computer is available: During the year, 750 laptop computers were sold. What was ending inventory and cost of goods sold on 12/31 under the LIFO cost flow assumption? a. $56,000 and $714,000. b. $45,000 and $725,000. c. $40,000 and $730,000. d. None of the answers is correct.
Dell gives you the following information: Beginning inventory: 10 units at $5.00 each Purchased: 10 units at $7.00 each 5 units at $16.00 each The company had 7 units in ending inventory at the end of the month. Assuming the company uses a periodic weighted average method, what is the company’s Cost of Goods Sold? a. $56 b. $70 c. $130 d. $144
ABC Company sold merchandise to XYZ Company on 10/31/15 FOB destination, terms 2/10, n/30. ABC uses a periodic inventory system and XYZ uses a perpetual inventory system. The goods were shipped 10/31 and received by XYZ on 11/1. What entry is required on ABC’s books on 11/1? a. Debit: COGS and Credit: Inventory b. Debit: Accounts receivable and Credit: Sales c. Debit: Purchases and Credit: Accounts Payable d. Debit: Inventory and Credit: Accounts Payable
In periods of rising prices, which inventory costing method will yield the highest operating income? a. FIFO b. LIFO c. Weighted Average d. Specific Identification
Using the LIFO method, the latest purchases of inventory are assumed to be contained: a. On the balance sheet as part of ending inventory b. On the income statement as part of cost of goods sold c. Equally split between the income statement and the balance sheet d. On the income statement as part of sales revenue e. Allocated between inventory and cost of goods sold based on the gross margin percentage