Question

In its first month of operations, Splish Brothers Inc. made three purchases of merchandise in the following sequence: (1) 155 units at $7, (2) 410 units at $8, and (3) 100 units at $9. Assuming there are 310 units on hand, compute the cost of the ending inventory under the (a) FIFO method and (b) LIFO method. Splish Brothers uses a periodic inventory system.

Answer 1

Answer:

FIFO= $2,580

LIFO= $2,325

Explanation:

Giving the following information:

(1) 155 units at $7

(2) 410 units at $8

(3) 100 units at $9.

Assuming there are 310 units on hand.

FIFO (first-in, first-out) method:

Ending inventory= last units purchased

Inventory= 100*9 + 210*8= $2,580

LIFO (last-in, first-out)

Inventory= first units purchased

Inventory= 7*155 + 8*155= $2,325