Question

XYZ Company reports the following initial balance and subsequent purchase of inventory. Assume that 2,000 units were sold during the year. Compute the costs of goods sold and balance of inventory for the year on the year-end balance sheet under the LIFO inventory costing methods.

Inventory balance at beginning of year	1,400 units @ $150 each	210,000
inventory purchased during the year	800 units @ $180 each	144,000
Cost of goods available for sale during the year	2,200 units	354,000

Group of answer choices

348,000; 246,000

324,000; 30,000

324,000; 150,000

318,000; 36,000

Answer 1

Answer : Correct option is 324000 , 30000.

Calculation of COGS and closing Inventory under LIFO basis.

Closing Inventory = Total Goods purchased - Total Goods Sold

= 2200-2000

= 200 units

Under LIFO basis inventory purchased at last is sold out first.Therefore in LIFO Basis the inventory purchsed during the year will be sold first which means that under LIFO first 800 units will be sold from the units purchased during the year and then remaining 1200 units (2000-800) will be sold from the inventory balance remaining at the beginning of the years

Therefore Cost of Goods Sold = (800 * 180) + (1200* 150)

= 144,000 + 180000

= 324,000

Closing Stock will be 200 units *150 = $ 30000.