In its first month of operations, Marigold Corp. made three purchases of merchandise in the following sequence: (1) 240 units at $5, (2) 340 units at $7, and (3) 440 units at $8. 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. Marigold Corp. uses a periodic inventory system.

Question

Jesse Snow

Business

3 January, 12:34

In its first month of operations, Marigold Corp. made three purchases of merchandise in the following sequence: (1) 240 units at $5, (2) 340 units at $7, and (3) 440 units at $8. 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. Marigold Corp. uses a periodic inventory system.

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Answers (1)

Know the Answer?

Jordan Mahoney · Answer 1

A) Cost of inventory = $1120

B) Cost of inventory = $700

Explanation:

Giving the following information:

Purchases:

(1) 240 units at $5

(2) 340 units at $7

(3) 440 units at $8.

Total units = 1020

There are 140 units on hand at the end of the period.

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

Cost of inventory = 140 * 8 = $1120

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

Cost of inventory = 140*5 = 700