BE6-2

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.

Compute the ending inventory using averagecost.

(LO 2), AP

BE6-3 Data for McLanie Company are presented in BE6-2. Compute the cost of the ending inventory under the averagecost method. (Round the cost per unit to three decimal places.)

Explain the financial statement effect of inventory cost flow assumptions.