Question

ABC Corp. engaged in the following transactions:

Beginning inventory 100x $15 purchase price

September 5 purchase 50x $20 purchase price

September 11 Sale 110@ $40 sale price

Calculate 1) the cost of good sold for the month of September using LIFO, 2) the ending inventory using LIFO and 3) Gross profit for the month using LIFO

Answer 1

Ans. 1	Available for sale
	Date		Units	Rate	Total
	1-Sep		100	$15.00	$1,500
	5-Sep		50	$20.00	$1,000
	Cost of goods available for sale		150		$2,500
	Units sold   = 110 units
	Periodic LIFO:
	Date	Units	Rate	Total
	5-Sep	50	$20.00	$1,000
	1-Sep	60	$15.00	$900
	Cost of goods sold	110		$1,900
Ans. 2	Ending inventory   = Cost of goods available for sale - Cost of goods sold
		$2,500 - $1,900
		$600
Ans. 3			LIFO
	Sales		$4,400
	(-) Cost of goods sold		-$1,900
	Gross profit		$2,500
	* Total sales = Units sold * Sale price
	110 * $40 = $4,400