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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 19-2 Determining the Cost of Merchandise Inventory.

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Presentation on theme: "CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 19-2 Determining the Cost of Merchandise Inventory."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 19-2 Determining the Cost of Merchandise Inventory

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

3 CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 19-2 4.Units needed to equal total units on hand LAST-IN, FIRST-OUT INVENTORY COSTING METHOD page 570 1.Total units on hand 3.Units from the earliest purchase 2.Beginning inventory units5.Unit price times lifo units 6.Total lifo cost 6 1 23 4 5

4 CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 19-2 3.Cost of ending inventory WEIGHTED-AVERAGE INVENTORY COSTING METHOD 1 2 3 page 571 2.Weighted- average price per unit 1.Total cost of inventory available

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

6 CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 19-2 COMPARISON OF INVENTORY METHODS page 572

7 CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 19-2 TERMS REVIEW first-in, first-out inventory costing method last-in, first-out inventory costing method weighted-average inventory costing method page 573


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