Question

Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	340 units @ $19
5	Purchase	315 units @ $21
10	Sales		235 units @ $29
15	Purchase	195 units @ $22
24	Sales		185 units @ $30

Multiple Choice

• $9,005

• $8,900

• $8,140

• $8,360

• $9,225

Answer 1

Date	Purchases	Cost of goods sold	Balance
May 1	Beginning		340 units x $ 19 = $ 6,460
May 5	315 units x $ 21 = $ 6,615		340 units x $ 19 = $ 6,460 315 units x $ 21 = $ 6,615
May 10		235 units x $ 21 = $ 4,935	340 units x $ 19 = $ 6,460 80 units x $ 21 = $ 1,680
May 15	195 units x $ 22 = $ 4,290		340 units x $ 19 = $ 6,460 80 units x $ 21 = $ 1,680 195 units x $ 22 = $ 4,290
May 24		185 units x $ 22 = $ 4,070	340 units x $ 19 = $ 6,460 80 units x $ 21 = $ 1,680 10 units x $ 22 = $ 220

LIFO stands for last in first out which assumes that last purchased items are sold out first. From the cost of goods sold column, total cost of goods sold amount to $ 9,005.

Hence, option A is the correct answer.

SUMMARY:

The cost of goods sold using LIFO method is calculated to $ 9,005.

Hence, option A is the correct answer.