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Periodic Inventory system is an inventory system in which an organization updates the closing inventory balances in general ledger when it conducts physical inventory count. All purchases are recorded in purchase account and when physical counting is done then balance is transferred to inventory account.
There are several methods of calculating the value of inventory in closing stock which are as below:
FIFO method (First In First Out) is the most using method of
LIFO method (Last In First Out) is the method in which the quantity which purchase in last before sale transaction will be sold first. In closing inventory the quantity will be counted from the beginning inventory and purchase thereafter.
Weighted Average method is the most commonly used method after FIFO method. In weighted average the quantity of all purchases and beginning inventory is clubbed and then a weighted average rate is calculated and closing inventory is valued at weighted average rate.
Specific Identification method is the method in which the quantity is specifically identified that from which lot or purchases the closing stock is available and the closing inventory is valued by taking rates and quantities of that specific lot(s) from which closing inventory is available.
Under periodic method only at closing the inventory valuation is done and cost of goods is calculated as below:
Requirement-1:
To Calculate:
In the given question we have to calculate the following details under periodic inventory system:
- Cost of goods and quantity available for sale
Requirement-2:
To Calculate:
We have to calculate no. of units in ending inventory under periodic inventory system.
Requirement -3:
To Calculate:
We have to calculate cost of closing inventory using FIFO, LIFO, Weighted Average and Specific Identification method under periodic inventory system.
Requirement -4:
To Calculate:
We have to calculate gross profit under FIFO, LIFO, Weighted Average and Specific Identification method under periodic inventory system.
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