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In its first month of operations, McLanie 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. McLanie uses a periodic inventory system.
In its first month of operations, McLanie 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. McLanie uses a periodic inventory system.
Final answer:The cost of theending inventoryfor McLanie Company under FIFO is $1,200, calculated by assigning the oldest costs to the ending inventory, which consists of 200 units at $6 each. For the LIFO method, the cost is $1,800, determined by assigning the newest costs to the 200 units at $9 each.Explanation:Computing Ending Inventory CostsThe subject question relates to computing thecost of ending inventoryusing two different accounting methodologies: FIFO (First-In, First-Out) and LIFO (Last-In, First-Out) under a periodic inventory system. The purchases were 300 units at $6, 400 units at $8, and 500 units at $9, with 200 units remaining at the end of the period.FIFO Method:Under FIFO, theoldest costsare assigned to the ending inventory. Therefore, the ending inventory of 200 units would consist of:200 units at $6 (from the first purchase)This gives us a total ending inventory cost of $1,200 under the FIFO method (200 units * $6).LIFO Method:Under LIFO, thenewest costsare assigned to the ending inventory. The ending inventory cost would involve:200 units at $9 (from the third purchase)The total ending inventory cost under LIFO would be $1,800 (200 units * $9).Learn more about Ending Inventory here:brainly.com/question/29779226#SPJ11...