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27 April, 15:21

In its first month of operations, Giffin Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $8, and (3) 500 units at $9. 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. Giffin uses a periodic inventory system.

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  1. 27 April, 17:38
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    Ending inventory (LIFO) = $1200

    Ending inventory (FIFO) = $1800

    Explanation:

    given data

    (1) 300 units = $6

    (2) 400 units = $8

    (3) 500 units = $9

    end of the period unit on hand = 200 unit

    solution

    LIFO

    as here 200 units left at end-of-period

    so Ending inventory (LIFO) = (200 * $6)

    Ending inventory (LIFO) = $1200

    and

    FIFO

    as here 200 units left at end-of-period

    so Ending inventory (FIFO) = (200 * $9)

    Ending inventory (FIFO) = $1800
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