Question

Pina Colada Corp. has the following inventory data:

Answer 1

Answer:

Amount allocated to cost of goods sold = $2,520

Explanation:

Total inventory held during the complete month.

Beginning = 33 units @ $21 = $693

7 July        = 116 units @ $22 = $2,552

22 July      = 17 units @ $24 = $408

Closing inventory = 53 units.

Under LIFO method, there is sale of inventory which was last bought or purchased.

Here, as per LIFO,

Total units = 33 + 116 + 17 = 166 units.

Units in closing inventory = 53 units.

That means, 33 units from opening and 20 units from purchases made as on 7 July

33 units @ $21 = $693

20 units @ $22 = $440

Total carrying value of closing inventory = $1,133

Therefore, amount allocated to cost of goods sold = 17 units @ $24 and 96 units @ $22

= $2,520