Question

Given the following:

	Number purchased	Cost per unit			Total
January 1 inventory	40	$	4		$	160
April 1	60		7			420
June 1	50		8			400
November 1	55		9			495
	205				$	1,475

a. Calculate the cost of ending inventory using the LIFO (ending inventory shows 61 units).

Cost of ending inventory            $

b. Calculate the cost of goods sold using the LIFO (ending inventory shows 61 units).

Cost of goods sold            $

Answer 1

(a)

As per LIFO method, Units last in are first issued. So Ending inventory units are units held in beginning.

61 units are remaining, so 61 units will be

40 units out of January stock @ $4 = $160

balance 21 units will be out of april 1 purchases @ $7 = $147

Total cost of ending inventory is    $307

So, cost of ending inventory = $307

(b) cost of Goods sold

Cost of goods sold = Purchase price of all inventory - Cost of ending inventory

= $1475 - $307

=$1168

So, cost of ending inventory is $1168

Please thumbs up.