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):

• 44 units at $112 per unit
• 90 units at $97 per unit
• 174 units at $77 per unit

Sales for the year totaled 290 units, leaving 18 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:

A. $630

B. $(630)

C. $0

D. $53

Answer 1

Correct answer------------(B) $(630)

Working

	Cost of Ending inventory
FIFO	$                 1,386
LIFO	$                 2,016
FIFO less LIFO	$                   (630)

FIFO
Total Units Avalable for sale		308
Units Sold		290
Closing Stock in Units		18
Valuation
Ending Inventory	18	@	$             77.00	$ 1,386

.

LIFO
Total Units Avalable for sale		308
Units Sold		290
Closing Stock in Units		18
Valuation
Ending Inventory	18	@	$           112.00	$ 2,016