Pearl Company Uses the Periodic Inventory System to Account for Inventories

question 107

Essay

Pearl Company uses the periodic inventory system to account for inventories. Information related to Pearl Company's inventory at October 31 is given below: $\begin{array}{rllrl}\text { October } 1 & \text { Beginning inventory } & 400 \text { units } @ \$ 9.60= & \$ 3,840 \\8 & \text { Purchase } & 800 \text { units } @ \$ 10.40= & 8,320 \\16 & \text { Purchase } & 600 \text { units } @ \$ 10.80= & 6,480 \\24 & \text { Purchase } & 200 \text { units } @ \$ 11.80= & \underline{2,360} \\& \text { Total units and cost } & 2,000 \text { units } & \$ 21,000\end{array}$
Instructions
1. Show computations to value the ending inventory using the FIFO cost assumption if 600 units remain on hand at October 31.
2. Show computations to value the ending inventory using the weighted-average cost method if 600 units remain on hand at October 31.
3. Show computations to value the ending inventory using the LIFO cost assumption if 600 units remain on hand at October 31.

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Definitions:

Natural Log

The logarithm to the base \(e\) (where \(e\) is approximately 2.718), a constant used in mathematics and economics to model growth processes.

Lottery Ticket

A slip of paper or card used to participate in a lottery game, where winners are typically selected by a random draw.

Risk Averse

A preference for certainty over uncertainty with regards to outcomes, particularly in the context of financial decisions.

Probability

A measure of the likelihood of a particular event occurring, ranging from 0 (impossible) to 1 (certain).