Question

Using a perpetual system, what is the cost of the goods sold for November if the company uses LIFO? Nov. 01 Inventory 24 units at $23.00 Nov. 04 Sold 10 units Nov. 10 Purchased 29 units at $22.00 Nov. 17 Sold 24 units Nov. 30 Purchased 23 units at $21.00 Using the perpetual LIFO system, what is the cost of the merchandise sold for November?

Answer 1

Answer: $758

Explanation:

When using the LIFO ( Last in First Out) method of valuing stock, you sell the stock that came in most recently first then you sell the stock that came the least recently last.

Sold 10 units in November 4 with the most recent inventory being 24 units at $23.

The 10 units therefore cost $23 each.

Sold 24 units on November 17 with the most recent inventory being 29 units purchased at $22 on the 10th of November.

This will therefore be valued at $22 each.

The Cost of Merchandise for the month is therefore,

= (10 * $23) + (24 * 22)

= 230 + 528

= $758