Question

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): 

40 units at $100 per unit 

70 units at $80 per unit 

170 units at $60 per unit 

Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year. 

In comparing the ending inventory balances of FIFO and LIFO, the ending inventory value under FIFO less the ending inventory balance under LIFO results in a difference of: 

 $400.

 $(400).

 $0.

 $50.

Answer 1

The Correct answer is option B i.e. $ (400)
The same has been illustrated below
Inventory Balance as per FIFO
	Purchases
Lot No.	Units	Rate	Amount
1	40	100	4000
2	70	80	5600
3	170	60	10200
Sales
270 units
It will first deduct from Lot No.1	40	100	4000
Then it will dedut from Lot No. 2	70	80	5600
Balance 160 units from Lot no 3	160	60	9600
Balance available from Lot 3	10	60	600
Inventory Balance as per LIFO
Lot No.	Units	Rate	Amount
	Purchases
1	40	100	4000
2	70	80	5600
3	170	60	10200
Sales
270 units
It will first deduct from Lot No.3	170	60	10200
Then it will dedut from Lot No. 2	70	80	5600
Balance 160 units from Lot no 1	30	100	3000
Balance available from Lot 1	10	100	1000
Difference between two	600-1000
	$ (400)
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