The document discusses different inventory costing methods including first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average. It provides examples of how to calculate the cost of inventory and cost of goods sold using each method. Specifically, it shows how to determine the cost of ending inventory and cost of goods sold given total units on hand and unit purchase prices over different periods. The document also defines key terms related to inventory costing methods.

1. LESSON 19-2
Determining the Cost of
Merchandise Inventory
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

2. 2
FIRST-IN, FIRST-OUT INVENTORY
COSTING METHOD
page 569
3
4
2
5
1
1.
2.
3.
4.
5.
Total units on hand
Units from the most recent purchase
Units needed to equal the total units on hand
Unit price times fifo units
Total fifo cost
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 19-2

3. LAST-IN, FIRST-OUT INVENTORY
COSTING METHOD
3
page 570
3 2
5
4
1
6
1. Total units on hand
2. Beginning inventory units
5. Unit price times lifo units
3. Units from the earliest purchase
6. Total lifo cost
4. Units needed to equal total units on hand
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 19-2

4. WEIGHTED-AVERAGE INVENTORY
COSTING METHOD
4
page 571
1. Total cost of
inventory
available
2. Weightedaverage price
per unit
1
3. Cost of ending
inventory
2
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 19-2

5. CALCULATING THE COST OF
MERCHANDISE SOLD
Cost of
Merchandise
Available for
Sale
$1,020.00
5
page 572
Fifo Cost of
–
Ending
Inventory
=
Cost of
Merchandise
Sold
–
=
$634.00
$386.00
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 19-2

6. COMPARISON OF INVENTORY
METHODS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6
page 572
LESSON 19-2

7. 7
TERMS REVIEW
page 573
 first-in, first-out inventory costing method
 last-in, first-out inventory costing method
 weighted-average inventory costing method
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 19-2