Question

In its first month of operations, Metlock, Inc. made three purchases of merchandise in the following sequence: (1) 300 units at $7, (2) 400 units at $9, and (3) 500 units at $10. Assuming there are 200 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. Metlock, Inc. uses a periodic inventory system. FIFO LIFO The Ending Inventory $Enter a dollar amount $Enter a dollar amount

Answer 1

Answer:

a.  $2,000

b.  $1,400

Explanation:

FIFO

FIFO method assumes that the inventory bought in first, will be the first to the sold to customers.

Ending Inventory = 200 units × $10

                             = $2,000

LIFO

LIFO methods assumes that the inventory bought in last will be the first to be sold to the customers.

Ending Inventory = 200 units × $7

                             = $1,400