FIFO LIFO Show List of Accounts Show Solution In its first month of operations,
ID: 2710061 • Letter: F
Question
FIFO
LIFO
Show List of Accounts
Show Solution
In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 200 units at $5, (2) 300 units at $7, and (3) 400 units at $8. Assuming there are 100 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Giffin uses a periodic inventory system.FIFO
LIFO
The Ending Inventory$
$
Show List of Accounts
Show Solution
Explanation / Answer
FIFO method
Under FIFO method, goods bought first are sold first. Therefore, ending inventory is the amount of goods purchased last. Last goods are purchased at $8 per unit. Therefore value of ending inventory:
Ending inventory = 100 x $8 = $800
LIFO
Under FIFO method, goods bought last are sold first. Therefore, ending inventory is the amount of goods purchased first. First goods are purchased at $5 per unit. Therefore value of ending inventory:
Ending inventory = 100 x $5 = $500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.