Question

A company had the following purchases and sales during its first year of operations: Purchases Sales January: 22 units at $180 14 units February: 32 units at $185 12 units May: 27 units at $190 16 units September: 24 units at $195 15 units November: 22 units at $200 28 units On December 31, there were 42 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory

Answer 1

Answer:

$7,815

Explanation:

As per Perpetual LIFO inventory valuation method the inventory purchased at last will be sold first and the value of ending inventory can be calculated as follows. The inventory sold has been deducted from the purchased inventory in that period first and then has been deducted from the previous period to arrive at the cost of ending inventory;

January: 8 units x $180 = $1,440

February: 20 units x $185 = $3,700

May: 11 units x $190 = $2,090

September: 3 units x $195 = $585

Cost of Ending Inventory of 42 units is $7,815