Question

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions.
Beginning inventory 10 units at $55
First purchase 25 units at $60
Second purchase 30 units at $65
Third purchase 15 units at $70
The firm uses the periodic inventory system. During the year, 60 units of the item were sold. ​
Required:
1. The ending inventory cost using LIFO is ___________.

Answer 1

Answer:

Ending inventory cost= $1,150

Explanation:

Giving the following information:

Beginning inventory 10 units at $55

First purchase 25 units at $60

Second purchase 30 units at $65

Third purchase 15 units at $70

The firm uses the periodic inventory system. During the year, 60 units of the item were sold.

Under the periodic inventory system, the cost of goods sold and ending inventory is calculated at the end of the period.

Under LIFO (last-in, first-out), the ending inventory costs are the one corresponding to the first units inn.

Units in inventory= total units - sales

Units in inventory= 80 - 60= 20 units

Ending inventory cost= 10*55 + 10*60= $1,150