Question

Given the following:

	Number purchased	Cost per unit			Total
January 1 inventory	31	$	4		$	124
April 1	51		7			357
June 1	41		8			328
November 1	46		9			414
	169				$	1,223

a. Calculate the cost of ending inventory using the LIFO (ending inventory shows 52 units).

b. Calculate the cost of goods sold using the LIFO (ending inventory shows 52 units).

Answer 1

Goods sold=Total units available-Ending inventory

=169-52

=117 units

As per LIFO;goods purchased last are sold off first.

Hence 117 units sold would consist of 46 units of November 1;41 units of June 1 and balance=(117-46-41)=30 units of April 1

Hence cost of goods sold=(46 units@$9)+(41 units@$8)+(30 units@$7)

=$952

Hence ending inventory would consist of =(51-30)=21 units of April 1 and 31 units of January 1 inventory

Hence ending inventory=(21 units@$7)+(31 units@$4)

=$271