In comparing the ending inventory balances of FIFO andLIFO, the ending inventory value under FIFO...

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):

40 units at $100 per unit

70 units at $80 per unit

170 units at $60 per unit

Sales for the year totaled 270 units, leaving 10 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:

$400.

$(400).

$0.

$50.

Solutions

Expert Solution


The Correct answer is option B i.e. $ (400)
The same has been illustrated below

Inventory Balance as per FIFO
	Purchases
Lot No.	Units	Rate	Amount

1	40	100	4000
2	70	80	5600
3	170	60	10200

Sales

270 units

It will first deduct from Lot No.1	40	100	4000
Then it will dedut from Lot No. 2	70	80	5600
Balance 160 units from Lot no 3	160	60	9600

Balance available from Lot 3	10	60	600

Inventory Balance as per LIFO

Lot No.	Units	Rate	Amount
	Purchases
1	40	100	4000
2	70	80	5600
3	170	60	10200

Sales

270 units

It will first deduct from Lot No.3	170	60	10200
Then it will dedut from Lot No. 2	70	80	5600
Balance 160 units from Lot no 1	30	100	3000

Balance available from Lot 1	10	100	1000

Difference between two	600-1000
	$ (400)

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ekkarill92 answered 2 years ago

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