Question

Perpetual Inventory Using LIFO

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	3,800 units at $40
Apr. 19	Sale	2,700 units
June 30	Purchase	4,600 units at $44
Sept. 2	Sale	4,800 units
Nov. 15	Purchase	1,800 units at $46

The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the last-in, first-out method. Present the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two or more different costs, enter the units with the LOWER unit cost first in the Inventory Unit Cost column.

Answer 1

LIFO is the inventory valuation method where item last purchased was first charged to cost of goods sold.

this is reverse of FIFO where first come first charge rule applied.