Question

Allsop Company had no beginning inventory. The company purchases 300 units of inventory in January at $5 each, 500 units at $4 each in August, and 200 units at $6 each in November. The company sells 150 units during the year. Allsop uses a periodic inventory system and the LIFO inventory costing method. What is the cost of goods sold?
A) $750
B) $900
C) $600
D) $934

Answer 1

Answer:

B) $900

Explanation:

Given: Purchased 300 units of inventory in January at $5 each.

           Purchased 500 units of inventory in August at $4 each.

           Purchased 200 units of inventory in November at $6 each.

          The company sold 150 units during the year.

As given company used periodic inventory system and the LIFO inventory costing method.

Periodic inventory system are the system that determine inventory at the end of each accounting period.

Last-in-first-out (LIFO) is inventory valuation method that assume inventory which are placed last, will be the first one to be sold out.

Now, computing cost of goods sold as per LIFO method.

We know sold unit is 150 unit

∴ Last inventory which was placed is in November, that is at $6 per unit.

Cost of goods sold= $units\ sold\times cost\ per\ unit$

⇒ Cost of goods sold= $150\times \ 6$

∴ Cost of goods sold=  $\ 900$

Hence, the cost of goods sold as per LIFO inventory costing method is $900.