Question

Shown below is activity for one of the products of Denver Office Equipment:

January 1 balance, 670 units @ $60 $40,200

Purchases:

      January 10: 670 units @ $54

      January 20: 1,060 units @ $60

Sales:

      January 12: 900 units

      January 28: 800 units

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses LIFO and a perpetual inventory system.

Answer 1

Date Particulars Amount

1.1 Opening Balance = 670*$60 = $40200

10.1 Purchases= 670*$54 = $36180

Total = $76380

12.1 Sales = 900 units where last 670 units will be first out then other one

670*$54 = $36180

230*$60 = $13800

Total = $49980

Balance (purchase- sale) = ($76380-49980)= $26400

20.1 Purchase 1060*$60 = $63600

28.1 Sales 800 units that will be out from last purchase which means

800*$60 = $48000

31.1 Ending inventory = Balance + purchases - sales

$26400 + $63600 - $48000

= $42000 Answer