Question

On December 31, there were 31 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory?

Answer 1

Answer:

Cost of ending inventory is $3,550

Revised Question:

The given question is incomplete. The complete question is as follows:

A company had the following purchases and sales during its first year of operations:

Purchases Sales

January 10:  6 units at $120

February 20: 5 units at $125

May 15: 9 units at $130

September 12: 8 units at $135

November 10: 13 units at $140

On December 31, there were 26 units remaining in ending inventory. Using the Perpetual FIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Explanation:

FIFO (First in First out) inventory system refers to the inventory system in which it is assumes that first purchases are the first sold goods. So for calculating the cost of ending inventory we'll calculate the value of unsold goods.

Calculations:

                     Unsold goods                        Cost of unsold goods

                                  13                                 (13 X $140) =$1820

                                  8                                  (8 X $135)  =$1080

                                  5                                  (5 X $130) =$650

Total unsold goods 26 Total cost of unsold goods =$3,550                                            

So the cost of ending inventory is $3,550