Question

The following data is available for one of the products sold by Learning Tree, Inc., which...

The following data is available for one of the products sold by Learning Tree, Inc., which uses the perpetual inventory system:

May 1 On hand, 1,000 units at $2.00 each $2,000
5 Purchased 2,000 units at $2.75 each 5,500
10 Sold 2,500 units at $16 each
18 Purchased 2,000 units at $4.00 each 8,000
24 Sold 1,500 units at $12 each
31 On hand, 1,000 units

If the LIFO method is used, what is the amount assigned to the ending inventory on May 30?

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Answer #1

As per LIFO;goods purchased last are sold off first.Hence sale on May 10 would consist of 2000 units of May 5 purchases and the balance (2500-2000)=500 units of begijnning inventory.

Hence ending inventory as on May 10=500 units of begijnning inventory.

Now sales as on May 24 would consist of 1500 units of May 18 purchases.

Hence the balance of 1000 units would be=500 units of begijnning inventory+(2000-1500)units of May 18 purchases.

=(500 units@$2 each)+(500 units@$4 each)

=$3000.

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