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Aiello Inc.had the following inventory in 2016.The company uses the LIFO method of accounting for inventory....

Aiello Inc.had the following inventory in 2016.The company uses the LIFO method of accounting for inventory.
Beginning Inventory, January 1, 2016
130 units @ $15.00

Purchase 200 units @ $18.00
Purchase 50 units   @ $ 13.50
Purchase 110 units @ $15.75
   Ending Inventory December 31, 2016 120units
The company's cist of goods sold for Fiscal 2016 is?

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Answer #1

Under the Last in first out (LIFO) method of inventory valuation, Cost of goods sold consists of the units from recent purchases. Ending inventory consists of the units from beginning inventory and earliest purchases.

Cost of goods available for sale = (130 units * $15) + (200 units * $18) + (50 units * 13.5) + (110 units * $15.75)

= $1,950 + $3,600 + $675 + $1,732.5

= $7,957.5

Ending inventory of 120 units consists of beginning inventory.

Ending inventory = 120 units * $15 = $1,800

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

= $7,957.5 - $1,800

= $6,157.5

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