(Learning Objective 2, 3: Computing inventory by three methods—perpetual system)

Fatigues Surplus began October with 72 tents that cost $17 each. During the month, Fatigues Surplus made the following purchases at cost:

Fatigues Surplus sold 324 tents and at October 31 the ending inventory consists of 52 tents.

The sale price of each tent was $51.

❙ Requirements 1. Determine the cost of goods sold and ending inventory amounts for October under the average cost, FIFO cost, and LIFO cost. Round average cost per unit to four decimal places, and round all other amounts to the nearest dollar.

2. Explain why cost of goods sold is highest under LIFO. Be specifi c.

3. Prepare Fatigues Surplus’ income statement for October. Report gross profi t. Operating expenses totaled $5,000. Fatigues Surplus uses average costing for inventory. The income tax rate is 40%.