Question

56.5 Horne Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 74 units were sold. Units Date May 1 30 Explanation Inventory Purchase Purchase Total Unit Cost $ 9 10 Total Cost $270 250 418 15 38 $938 Instructions Calculate the ending inventory at May 31 using the (a) FIFO, (b) LIFO, and (c) average- cost methods. (For average-cost, round the average unit cost to three decimal places.) Prove the amount allocated to cost of goods sold under each method.

Answer 1

19 Units Units in Ending Inventory = 93 Units - 74 Units = Calculation of Ending Inventory : (a). Under FIFO Method: 19 Units x $11 = $209.00 (b). Under LIFO Method: 19 Units x $9 = $171.00 (c'). Under Average Cost Method: Average Cost Per Unit = Total Cost / Total Units = $938/93 Units = $10.09 Cost of Ending Inventory = 19 Units x $10.09 = $191.71