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Mnenie [13.5K]
3 years ago
15

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use t

his information to answer the questions that follow. Sep. 1 Inventory 20 units at $20 4 Sold 10 units 10 Purchased 30 units at $25 17 Sold 20 units 30 Purchased 10 units at $30 ​ ​ If Addison uses LIFO, the September 30 inventory balance is
a. $750
b. $650
c. $700
d. $800
Computers and Technology
1 answer:
Citrus2011 [14]3 years ago
4 0

Answer:

a.$750

Explanation:

LIFO inventory system means LAST IN FIRST OUT, so leté see what happens during september:

  • Sep 1 st=> Stock is 20 units at 20$ => 400$
  • Sep 4 th => Inventory decreases in the 10 units sold. Final inventory is (20-10) =10 units at 20$= 10*20= 200$
  • Sep 10th => inventory increases in 30 units at 25$ => final inventory is 30u*25$/u+10u*20$/u=950$
  • Sep 17th =>with the sale of 20 units the inventory decreases, and since we are using a LIFO system, the 20 units sold are the last purchased , so we sold 20 units with a cost of $25. Final inventory: 10units at $20+ 10 units at $25 = 450$
  • Sep 30Th with the purchase of 10 additional units at $30, we have a final inventory of 30 units: 10 units at $20+ 10 units at $25 + 10 units at $30= TOTAL FINAL INVENTORY= $200+$250+$300 => $750
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