Question

In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. Assuming there are 200 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Giffin uses a periodic inventory system.

Answer 1

Answer:

Ending inventory (LIFO)  = $1200

Ending inventory (FIFO) = $1800

Explanation:

given data

(1) 300 units = $6

(2) 400 units = $8

(3) 500 units = $9

end of the period unit on hand = 200 unit

solution

LIFO

as here 200 units left at end-of-period

so Ending inventory (LIFO) = (200 × $6)

Ending inventory (LIFO)  = $1200

and

FIFO

as here 200 units left at end-of-period

so Ending inventory (FIFO) = (200 × $9)

Ending inventory (FIFO) = $1800