Question

During 2020, a company sells 377 units of inventory for $92 each. The company has the following inventory purchase transactions for 2020:

Date		Transaction	Number of Units			Unit Cost			Total Cost
Jan.	1	Beginning inventory		65		$	68			$	4,420
May	5	Purchase		170			70				11,900
Nov.	3	Purchase		187			73				13,651
				422						$	29,971

Calculate ending inventory and cost of goods sold for 2020 assuming the company uses LIFO.

Ending inventory
Cost of goods sold

Answer 1

LIFO means unit purchase in recent, sold first. Per unit of cost of goods sold is the per unit cost of the most recent purchase.

Cost of goods sold = (187 units * $73) + (170 units * $70) + [(377 units - 187 units - 170 units) * $68)]

= $13,651 + $11,900 + (20 units * $68)

= $13,651 + $11,900 + $1,360

= $26,911

Cost of ending inventory = Cost of goods available for sale - Cost of goods sold

= $29,971 - $26,911

= $3,060

Ending Inventory	$26,911
Cost of goods sold	$3,060