Question

In its first month of operations, Lily Company made three purchases of merchandise in the following sequence: (1) 300 units at $7, (2) 410 units at $8, and (3) 210 units at $9. Assuming there are 360 units on hand, compute the cost of the ending inventory under the FIFO method and LIFO method. Lily uses a periodic inventory system.

What is FIFO and LIFO Cost of the ending inventory?

Answer 1

Lily Company: value of cost of ending inventory

Ending inventory - 360 units

	FIFO	LIFO
Cost of ending inventory	(210units×$9 per unit)+(150units×$8 per unit) = $ 3090	(300units×$7 per unit)+(60units×$8 per unit) = $ 2,580

Assuming that sale was happened after the date of all units we're purchased. FIFO is an assumption that first purchased units will sold first, LIFO is an assumption that recent purchased units will sold first.