Question

In its first month of operations, Bramble Corp. made three purchases of merchandise in the following sequence: (1) 240 units at $4, (2) 340 units at $6, and (3) 440 units at $7. Assuming there are 140 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. Bramble Corp. uses a periodic inventory system. FIFO LIFO The Ending Inventory $Enter a dollar amount $Enter a dollar amount Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

See explanation section

Explanation:

Requirement A

FIFO method: First-in, First-out method means that the inventories are sold which is purchased earlier.

Cost of ending inventory is as follows:

As Bramble Corp. had 140 units on hand, the ending inventory (in units) = 140 units.

As Bramble Corp. used FIFO method, 140 units of the purchased merchandise of 440 units of transaction (3) were at hand.

Therefore, cost of ending inventory = 140 units × $7 = $980.

Requirement B

LIFO Method: Last-in, first-out method means that the inventories are sold which is purchased at the end.

Cost of ending inventory is as follows:

As Bramble Corp. had 140 units on hand, the ending inventory (in units) = 140 units.

Again, As Bramble Corp. used LIFO method, 140 units of the purchased merchandise of 240 units of transaction (1) were at hand.

Therefore, cost of ending inventory = 140 units × $4 = $560.