Question

A firm purchases 1,300 units of product at $2.65/unit during the year and sells 1,500 units....

A firm purchases 1,300 units of product at $2.65/unit during the year and sells 1,500 units. If the beginning inventory consists of 300 units valued at $2.40/unit and a periodic LIFO inventory system is use then the LIFO liquidation this year?

Decreased income by $50.

Increased income by $50.

Decreased income by $75.

Increased income by $75.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The answer would be Option B. Increased income by $50.

Since the LIFO system id being used. Out of the 1500 sales, 1300 will be made from the new purchase made as that is the latest.

The remaining 200 will be sold from the beginning inventory.

This beginning inventory initially valued at $2.4 is being sold at $2.65/unit. So the difference in income is (2.65-2.4)*200 = $50

This gives us the answer that income will increase by $50.

Hope this answers your question. If you liked the answer please give an up-vote. It would be highly encouraging for me. Thank You.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company sells 1,900 units during the year.  In addition, the company uses a periodic inventory system,...
A company sells 1,900 units during the year.  In addition, the company uses a periodic inventory system, has a beginning inventory of 600 units that were purchased at $10 per unit, and has the following purchases and sales.  What is the company's cost of goods sold if it uses the LIFO method? Date     Units purchased Cost per unit January 1,000 $11 May 900 $12 October 700 $14
During the year, Zhang Zhang Inc. inventory purchases were as follow: Quarter Unit Purchased Cost per...
During the year, Zhang Zhang Inc. inventory purchases were as follow: Quarter Unit Purchased Cost per Unit Total 1 200 $ 2.30 $ 460 2 300 2.5 750 3 100 2.9 290 4 100 3.1 310 700 $ 1,810 Beginning inventory was 300 units at $2 per unit = $600 Sales for the year were 800 units What is the COGS for the year under FIFO? [For practice purpose, try to calculate COGS under LIFO and ending inventory under both...
Sales during the year were 500 units. Beginning inventory was 250 units at a cost of...
Sales during the year were 500 units. Beginning inventory was 250 units at a cost of $5 per unit. Purchase 1 was 400 units at $6 per unit. Purchase 2 was 200 units at $7 per unit. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system) was: $1850 $3200 $2750 $3800
Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The...
Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with inventory of 6,400 units of its only product. The beginning inventory balance of $105,600 consisted of the following layers:    2,400 units at $14 per unit = $ 33,600 4,000 units at $18 per unit = 72,000 Beginning inventory $ 105,600    During the three years 2018–2020, the cost of inventory remained constant at $20 per unit. Unit purchases and...
Ferris Company began 2018 with 9,000 units of its principal product. The cost of each unit...
Ferris Company began 2018 with 9,000 units of its principal product. The cost of each unit is $4. Merchandise transactions for the month of January 2018 are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 6,000 $ 5 $ 30,000 Jan. 18 9,000 6 54,000 Totals 15,000 84,000 *Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 5,000 Jan. 12 3,000 Jan. 20 6,000 Total 14,000 10,000 units were on...
The Laurel Corporation starts the year with a beginning inventory of 600 units at $5 per...
The Laurel Corporation starts the year with a beginning inventory of 600 units at $5 per unit. The company purchases 1,000 units at $4 each in February and 400 units at $6 each in October. Laurel sells 300 units during the year. Laurel has a periodic inventory system and uses the FIFO inventory costing method. What is the amount of cost of goods sold? A) $1,200 B) $1,868 C) $1,500 D) $1,800 Manufacturers have three types of inventory, which include...
Mabel Consolidated sells packrabbits. Below is information relating to Mabel’s purchase of packrabbits during September. During...
Mabel Consolidated sells packrabbits. Below is information relating to Mabel’s purchase of packrabbits during September. During the same month, 142 packrabbits were sold. Mabel uses a periodic inventory system. Date Explanation Units Unit Cost Total Cost Sept.  1  Inventory  28 $75 Sept. 12  Purchases  53  78    Sept. 19  Purchases  68  82    Sept. 26  Purchases  34  85     Totals 183 Determine Cost of Goods Sold and Cost of Ending Inventory under FIFO, LIFO and Average Inventory methods and show your work!
Has the following inventory data: July 1 Beginning Inventory 50 units at $120 5 Purchases 300...
Has the following inventory data: July 1 Beginning Inventory 50 units at $120 5 Purchases 300 units at $112 14 Sale 200 units 21 Purchases 150 units at $115 30 Sale 140 units Assuming that a periodic inventory system is used what is the cost of goods sold on a FIFO basis?
Last year a firm made 100 units of its product available at a price of $10...
Last year a firm made 100 units of its product available at a price of $10 per unit. This year at $8 per unit the firm supplied 100 units. What is most likely to have happened over the year? a. Quantity supplied has decreased. b. Quantity demanded has increased. c. Supply has increased. d. Supply has decreased e. Demand has increased. Pl elaborate
1. Salmone Company reported the following purchases and sales of its only product. Salmone uses a...
1. Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.    Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 330 units @ $18 5 Purchase 310 units @ $20 10 Sales 230 units @ $28 15 Purchase 190 units @ $21 24 Sales 180 units @ $29 2. $8260 $7540 $16,130 $7750 $8590 1. At year-end,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT