In its first month of operations, Culver Company made three purchases of merchandise in the following sequence: (1) 205 units at $6, (2) 290 units at $6, and (3) 385 units at $10. Assuming there are 245 units on hand. Compute the cost of the ending inventory under the FIFO method and the LIFO method. Culver uses a periodic inventory system.

$2,450 ; $1,430

Explanation:

The computation of the ending inventory using the periodic inventory system is shown below:

Under FIFO method

= 245 units × $10

= $2,450

We take the last units in this FIFO method

Under the LIFO method

= 205 units × $6 + 40 units × $5

= $1,230 + $200

= $1,430

We take the first units in this LIFO method

Hence, the closing inventory is come

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