Question

During the year, Trombley Incorporated has the following inventory transactions.

Date		Transaction	Number of Units			Unit Cost			Total Cost
Jan.	1	Beginning inventory		19		$	21			$	399
Mar.	4	Purchase		24			20				480
Jun.	9	Purchase		29			19				551
Nov.	11	Purchase		29			17				493
				101						$	1,923

For the entire year, the company sells 80 units of inventory for $29 each.

2. Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit

Answer 1

Under LIFO units sold consists of units from recent purchases and ending inventory consists of units from beginning inventory and earliest purchases.

Ending inventory units = Units available for sale - Units sold

= 101 - 80

= 21

21 units in ending inventory consists of 19 units from beginning inventory and 2 units from March 4 purchases.

Ending invenotry = (19 * $21) + (2 * $20)

= $399 + $40

= $439

Cost of goods sold = Cost of units available for sale - Ending inventory

= $1,923 - $439

= $1,484

Sales revenue = 80 units * $29 = $2,320

Gross profit = Sales revenue - Cost of goods sold

= $2,320 - $1,484

= $836