Question

Moroni Industries has the following inventory information. July1Beginning Inventory40 units at $120 5Purchases240 units at $112 14Sale160 units 21Purchases120 units at $115 30Sale140 units Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis?

Answer 1

Answer:

The amount allocated to ending inventory is $ 11,520

Explanation:

Using LIFO basis of inventory valuation implies that the items received last are sold first,in other words, sales of 160 units comes from the purchases of 240 units made on July 5,that leaves 80 units of the purchase in closing inventory.

However,the sale of 140 units on 30 July is taken from purchases of 120 units on July 21 as well as purchases of July 5.

The amount allocated to ending inventory is computed below:

July 5                        60 units at $112    $6,720

opening inventory    40 units  at $120 $4,800

Value of closing inventory                     $11,520