Question 3:

FIFO and Average Cost periodic inventory methods.

The Rock Shop uses periodic inventory. The following data are related to an item of inventory:

Inventory, January 1 100 units @ $5.00

Purchase, January 9 300 units @ $5.40

Purchase, January 19 100 units @ $6.00

Inventory, January 31 150 units

Instructions

(a) What value should be assigned to the ending inventory using FIFO?

(b) What value should be assigned to cost of goods sold using Average Cost?