Question

erpetual Inventory Using LIFO Beginning inventory, purchases, and sales for Item Gidget are as follows: Sept. 1 Inventory 80 units at $175 10 Sale 65 units 18 Purchase 75 units at $180 27 Sale 70 units Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of merchandise sold on September 27 and (b) the inventory on September 30. a. Cost of merchandise sold on September 27 $fill in the blank 1 b. Inventory on September 30 $fill in the blank 2

Answer 1

Under LIFO method, unit purchase in recent, sold first. Per unit Cost of merchandise sold is equal to the per unit cost of the most recent purchased Inventory.

Per unit Cost of ending inventory is equal to the cost of the inventory which purchase first.

Cost of merchandise sold on September 27 = 70 units * $180

= $12,600

Cost of ending inventory = [(80 units - 65 units) * $175] + [(75 units - 70 units) * $180]

= (15 units * $175) + (5 units * $180)

= $2,625 + $900

= $3,525