Question

In its first month of operations, Kingbird, Inc. made three purchases of merchandise in the following sequence: (1) 240 units at $7, (2) 340 units at $9, and (3) 440 units at $10. 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. Kingbird, Inc. uses a periodic inventory system.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Purchases:

(1) 240 units at $7.

(2) 340 units at $9.

(3) 440 units at $10.

Assuming there are 140 units on hand at the end of the period.

A) FIFO (first-in, first-out)

Inventory= 140*10= $1,400

B) LIFO (last-in, first-out)

Inventory= 140*7= $980

Answer 2

The cost of the ending inventory of 140 units under FIFO is $1,400 while under the LIFO is $980.

Since there are 140 units on hand at the end of the period.

Using the FIFO method:

Cost of the ending inventory = 140 units * $10

Cost of the ending inventory = $1,400

Using the LIFO method:

Cost of the ending inventory = 140 units * $7

Cost of the ending inventory = $980

In conclusion, the cost of the ending inventory of 140 units under FIFO is $1,400 while under the LIFO is $980.

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