Answer:
The answer is $130
Explanation:
LIFO - Last in First out. Under this assumption, the inventory that was bought last will be sold last. So the ending inventory will be the inventory that was bought earliest.
Beginning inventory 20 units at $4 each
First purchase 40 units at $5
2nd purchase 40 units at $6
Sales 70 units
So under LIFO;
40 units that was purchased last will first go. The cost is 40 x $6= $240
30 units out of the second purchase of 40units will be sold(remaining 10). The cost is 30 x 5 = $150.
So the cost of goods sold is $240 + $150 = $390.
Ending inventories are what is remaining after 70units had been sold.
10 out of the second purchase is remaining. The cost is 10 x 5 = $50
Opening inventory is remaining too. The cost is 20 x 4 = $80.
Therefore, the ending inventory is
$50 + $80
=$130
