Question

Ross Inc.’s inventory records show the following data relative to an item sold.

Date	Units	Unit cost
May 1   Inventory	1,100	$20.50
May 3   Purchases	10,000	20.80
May 7   Sales	5,000
May 20 Purchases	8,000	21.00
May 22 Sales	8,500
May 30 Purchases	3,000	21.50

Assuming that Ross maintains a periodic inventory system with a monthly physical count, compute ending inventory on May 31 under

1. Specific identification
2. Weighted average cost
3. FIFO

The actual ending units remaining at May 31 are from the following date:

May 1, 500 units

May 3, 1,800 units

May 20, 4,000 units

May 30, 2,300 units

Answer 1

Ans.	Available for sale
	Date		Units	Rate	Total
	01-May		1100	$20.50	$22,550
	03-May		10000	$20.80	$208,000
	20-May		8000	$21.00	$168,000
	30-May		3000	$21.50	$64,500
	Cost of goods available for sale		22100		$463,050
	Units sold (5,000 + 8,500) = 13,500 units
	Units in ending inventory   =    Units available for sale - Units sold
	22,100 - 13,500
	8,600 units
Ans. A	Specific Identification:
	Date	Units	Rate	Total
	01-May	500	$20.50	$10,250
	03-May	1800	$20.80	$37,440
	20-May	4000	$21.00	$84,000
	30-May	2300	$21.50	$49,450
	Ending inventory	8600		$181,140
Ans. B	Weighted Average Cost :
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$463,050 / 22,100
	$20.95249	per unit
	Ending inventory   = Units in ending inventory * Average cost per unit
	8,600 * $20.95
	$180,191	(rounded off)
Ans. C	Periodic FIFO:
	Date	Units	Rate	Total
	30-May	3000	$21.50	$64,500
	20-May	5600	$21.00	$117,600
	Ending inventory	8600		$182,100
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.