CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 19-2LESSON 19-2

Determining the Cost of Merchandise Inventory

CENTURY 21 ACCOUNTING © Thomson/South-Western

2

LESSON 19-2

FIRST-IN, FIRST-OUT INVENTORY FIRST-IN, FIRST-OUT INVENTORY COSTING METHODCOSTING METHOD

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1. Total units on hand2. Units from the most recent purchase3. Units needed to equal the total units on hand4. Unit price times fifo units5. Total fifo cost

CENTURY 21 ACCOUNTING © Thomson/South-Western

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LESSON 19-2

4. Units needed to equal total units on hand

LAST-IN, FIRST-OUT INVENTORY LAST-IN, FIRST-OUT INVENTORY COSTING METHODCOSTING METHOD page 570

1. Total units on hand

3. Units from the earliest purchase2. Beginning inventory units 5. Unit price times lifo units

6. Total lifo cost

6611

2233

44

55

CENTURY 21 ACCOUNTING © Thomson/South-Western

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LESSON 19-2

3. Cost of ending inventory

WEIGHTED-AVERAGE INVENTORY WEIGHTED-AVERAGE INVENTORY COSTING METHODCOSTING METHOD

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2. Weighted-average price per unit

1. Total cost of inventory available

CENTURY 21 ACCOUNTING © Thomson/South-Western

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LESSON 19-2

CALCULATING THE COST OF CALCULATING THE COST OF MERCHANDISE SOLDMERCHANDISE SOLD page 572

Cost ofMerchandise

Sold=

Fifo Cost of Ending

Inventory–

Cost ofMerchandise

Available for Sale

$634.00=$386.00–$1,020.00

CENTURY 21 ACCOUNTING © Thomson/South-Western

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LESSON 19-2

COMPARISON OF INVENTORY COMPARISON OF INVENTORY METHODSMETHODS page 572

CENTURY 21 ACCOUNTING © Thomson/South-Western

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LESSON 19-2

TERMS REVIEWTERMS REVIEW

first-in, first-out inventory costing method last-in, first-out inventory costing method weighted-average inventory costing method

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