During year 2019, Chocolate International (GI) has purchased its inventory as follow: Date Units Unit Cost Total Cost Beginning Inventory 2,500 $8.00 $20,000 April 8, 2019 4,000 $8.10 $32,400 August 7, 2019 2,000 $8.30 $16,600 September 28, 2019 3,500 $8.40 $29,400 Total 12,000 $98,400 Additional Information On December 31, 2019, GI conducted a physical inventory and discovered that it has 800 unit remains in ending inventory. GI used the periodic inventory system. Requirements [You must show your work/steps of how you arrive at your answers] Question 1: Use the weighted average method to find GI's Cost of goods sold and Cost of Ending Inventory. Question 2: Use the LIFO method to find GI's Cost of goods sold and Cost of Ending Inventory. Question 3: Use the FIFO method to find GI's Cost of goods sold and Cost of Ending

Chocolate International (CI)

Periodic Inventory system

1. Weighted-Average method:

Cost of goods sold = $91,840 (11,200 * $8.20)

Cost of ending inventory = $6,560 (800 * $8.20)

2. LIFO method:

Cost of ending inventory = $6,400 (800 * $8.00)

Cost of goods sold = Total cost Minus Cost of Ending Inventory

= $98,400 - $6,400

= $92,000

3. FIFO method:

Cost of ending inventory = $6,720 (800 * $8.40)

Cost of goods sold = Total cost Minus Cost of Ending Inventory

= $98,400 - $6,720

= $91,680

Explanation:

a) Data and Calculations:

Date                  Description                 Units    Unit Cost     Total Cost

April 1, 2019      Beginning Inventory 2,500        $8.00         $20,000

April 8, 2019     Purchase                   4,000         $8.10         $32,400

August 7, 2019 Purchase                   2,000        $8.30          $16,600

September 28  Purchase                   3,500        $8.40         $29,400

Total                                                   12,000                           $98,400

Weighted-average cost per unit = $8.20

Ending inventory                                   800

Units sold                                           11,200 (12,000 - 800)

b) The FIFO (First-in, First-out) method is based on the assumption that Chocolate sales are made from the first items in stock.  This means that the ending inventory of Chocolate is made up of the newest items.

On the other hand, the LIFO (Last-in, First-out) method bases its assumption on the sale of the newest Chocolate in stock while the oldest items form the bulk of the ending inventory.

The weighted-average method calculates a weighted-average unit cost of inventory by dividing the total cost of Chocolate available for sale by the total units of Chocolate for sale.  Using the period inventory system, the computations of both the cost of goods sold and the ending inventory are done at the end of the specific financial period, unlike the perpetual inventory system.

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