Chapter 06 Homework (Application) Inventory by Three Methods; Cost of Goods Sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at $1,800 May 15 Purchase 28 units at $1,950 Aug. 7 Purchase 10 units at $2,040 Nov. 20 Purchase 16 units at $2,100 There are 20 units of the item in the physical inventory at December 31. Determine the cost of ending inventory and the cost of goods sold by three methods, presenting your answers in the following form: Round your final answers to the nearest dollar. Cost Inventory Method Ending Inventory Cost of Goods Sold a. First-in, first-out method $ 2,916 X X b. Last-in, first-out method 1,800 X 6,090 X c. Weighted average cost method 2,140 X 5,778 X Feedback Check My Work a. In the FIFO method, the first units purchased are assumed to be the first to be sold. Therefore, ending inventory costs are calculated by taking the number of items remaining in the physical inventory times the most recent purchase price. To compute the cost of goods sold, deduct the ending inventory value from the sales amount. b. In the LIFO method, the last units purchased are assumed to be the first to be sold. Therefore, ending inventory costs are calculated by taking the number of items remaining in the physical inventory times the earliest purchase costs. To compute the cost of goods sold, deduct the ending inventory value from the sales amount. c. In the weighted average cost method, the average cost of all available units purchased is applied to the number of units sold and in ending inventory. Therefore, you must first obtain a unit cost by dividing the total cost of all units available for sale by the number of units available for sale. Then, multiply the number of items remaining in the physical inventory times this unit cost. To compute the cost of goods sold, deduct the ending inventory value from the sales amount