Dene Company uses a periodic inventory system and its accounting records include the following inventory information for the month of July:

A physical inventory count determined that 620 units were at July 31.

(a)

Calculate the ending inventory and the cost of goods sold under (1) FIFO and (2) weighted average. (Round the weighted average cost per unit and final answers to 2 decimal places, e.g. 5,275.75.)

FIFO

Weighted average

Ending inventory

A ★

★｜中

★田

Units

Unit Cost

Total Cost

July 1

Inventory

150

$5.00

$750.00

12 Purchase

230

6.75

1,552.50

Sale

(250)

28

Purchase

490

7.00

3,430.00

To calculate the ending inventory and the cost of goods sold (COGS) under the FIFO (First-In, First-Out) and weighted average methods, we need to determine the cost associated with the units sold and the units remaining at the end of the period.

Here is the given information:

- Beginning Inventory on July 1: 150 units at $5.00 each
- Purchase on July 12: 230 units at $6.75 each
- Sale: 250 units (assume sold at some price, but not relevant for inventory calculation)
- Purchase on July 28: 490 units at $7.00 each

Physical inventory count on July 31: 620 units

### FIFO Method
Under FIFO, the earliest goods purchased are the first to be sold.

1. **Determine the ending inventory:**
   - Remaining units at the end of July: 620 units

2. **Breakdown of the remaining units:**
   - Since we use the earliest goods first, we start counting the most recent purchases back.
   - Last purchase: 490 units at $7.00 each
   - Remaining units needed: $620 - 490 = 130$
   - Prior purchase: 230 units at $6.75 each (only 130 needed)

3. **Calculate the ending inventory cost:**
   - 490 units at $7.00 each: $490 \times 7.00 = 3,430.00$
   - 130 units at $6.75 each: $130 \times 6.75 = 877.50$
   - Total ending inventory cost: $3,430.00 + 877.50 = 4,307.50$

4. **Calculate the cost of goods sold (COGS):**
   - Total units available: $150 + 230 + 490 = 870$ units
   - Units sold: $870 - 620 = 250$ units
   - Beginning Inventory: 150 units at $5.00 each: $150 \times 5.00 = 750.00$
   - Next, 230 units at $6.75 each: $230 \times 6.75 = 1,552.50$
   - Remaining 250 - 150 = 100 units from July 28 purchase: $100 \times 7.00 = 700.00$
   - Total COGS: $750.00 + 1,552.50 + 700.00 = 3,002.50$

### Weighted Average Method
Under the weighted average method, we calculate an average cost per unit for all units available for sale during the period.

1. **Calculate the total cost of all inventory:**
   - Beginning Inventory: $150 \times 5.00 = 750.00$
   - Purchase on July 12: $230 \times 6.75 = 1,552.50$
   - Purchase on July 28: $490 \times 7.00 = 3,430.00$
   - Total cost: $750.00 + 1,552.50 + 3,430.00 = 5,732.50$

2. **Calculate the total units available for sale:**
   - Total units: $150 + 230 + 490 = 870$ units

3. **Calculate the weighted average cost per unit:**
   - Weighted average cost per unit: $ \frac{5,732.50}{870} = 6.59 $ (rounded to 2 decimal places)

4. **Calculate the ending inventory cost:**
   - Ending inventory (620 units) at weighted average cost: $620 \times 6.59 = 4,085.80$

5. **Calculate the cost of goods sold (COGS):**
   - Units sold: 250 units
   - COGS: $250 \times 6.59 = 1,647.50$

### Summary
- **FIFO Method:**
  - Ending Inventory: $4,307.50
  - Cost of Goods Sold: $3,002.50

- **Weighted Average Method:**
  - Ending Inventory: $4,085.80
  - Cost of Goods Sold: $1,647.50

Would you like more details or have any questions?

Here are 5 questions you can ask next:
1. How do you calculate the cost of goods available for sale?
2. What are the advantages of using the FIFO method?
3. Can you explain the LIFO (Last-In, First-Out) method?
4. How does the periodic inventory system differ from the perpetual inventory system?
5. Why is the weighted average method useful for inventory valuation?

Tip: Always round intermediate calculations to maintain consistency in financial reporting.

Learn how to calculate ending inventory and cost of goods sold using the FIFO and weighted average methods for inventory valuation. This detailed solution covers calculations based on inventory data, including purchases, sales, and physical counts. Suitable for advanced business accounting.

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