Exercise 8-19 Pronghorn Corporation began operations on December 1, 2016. The on

Question

Exercise 8-19 Pronghorn Corporation began operations on December 1, 2016. The only inventory transaction in 2016 was the purchase of inventory on December 10, 2016, at a cost of $25 per unit. None of this inventory was sold in 2016. Relevant information is as follows. Ending inventory units December 31, 2016 December 31, 2017, by purchase date 127 December 2, 2017 July 20, 2017 127 50 177 During the year 2017, the following purchases and sales were made. Purchases Sales 227 March 15 327 units at $30 uly 20 September 4 227 units at 36 December 2 127 units at 38 April 10 August 20 327 November 18 177 December 12 227 327 units at 32 The company uses the periodic inventory method. Calculate average-cost per unit. (Round answer to 2 decimal places, e.?. 2.76.) Determine ending inventory under (1) specific identification, (2) FIFO, (3) LIFO, and 4) average-cost. (Round answers to O decimal places, e.g. 2,760.) Specific Identification FIFO LIFO Average-Cost Ending Inventory Calculate price index. (Round answer to 4 decimal places, e.g. 2.7653.) Price Index Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2017, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $25 per unit.) (Round answer to o decimal places, e.g. 2,760.) Ending inventory at dollar-value LIFO

Explanation / Answer

First answer is to find out the average cost of the inventory = Total cost of closing inventory / closing units

= (Multiply the total units x average unit perice) / Total number of units

= (177 x 34.78) / 177 = $34.78

Part two of the answer is value of closing inventory

1. Specific inventory costs = Dec 2, 2017 - 127 x 38 = 4826 + July 20, 2017 50 x 32 = 1600 = $6426

2. FIFO method - the last purchase was made on dec 2, 2017 and previous to that was sept 4, 2017 as we are using FIFO method the cost of 127 units and 50 units respectively will be the value of closing inventory

127 x 38 + 50 x 36 = $6,626

3. LIFO method last in first out means purchases made in the begining will still be present

opening balance of 127 units plus 50 units purchases made on mar 15, 2017 @ $30

cost of inventory = 127 x 25 + 50 x 30 = $4,675

4. Average cost of inventory is 34.78 x 177 = $6156.06

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