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Apples Inc just began business and made the following four inventory purchases in June.    June...

Apples Inc just began business and made the following four inventory purchases in June.   

June 1    135 units $890

June 10 180 units 1208

June 15 180 units    1232

June 28 135 units 956

A physical count of merchandise inventory on June 30 reveals that there are 180 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is:

Please provide step by step to the answer. Thank you!

Business   Accounting   
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Answer #1

Value of ending inventory = $1,192

As the company uses Lifo method, units purchased last are sold first.

Now we have 180 units of ending inventory. As the company uses Lifo, among these 180 units, 135 belong to June 1 purchases. And remaining 45 units (180-138)belong to June 10 purchases.

Value of inventory = $890 + [(1208/180)x45]

Here we are calculating cost of one unit for June 10 purchases and multiplying with 45 units

= $890+$302

=$1,192

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