Question

Esquire Corp. uses the periodic inventory system. During its first year of operations, Esquire made the following purchases (list in chronological order of acquisition):
• 20 units at $50
• 35 units at $40
• 85 units at $30
Sales for the year totaled 135 units, leaving 5 units on hand at the end of the year.
Ending inventory using the LIFO method is
A. $150
B. $177
C. $250
D. $1,540

Answer 1

Answer:

C. $250

Explanation:

The LIFO stands for Last in first out. It means the last units are first sold and the remaining units are later sold

We know that

Sales for the year = 135 units

Closing inventory = 5 units

The 135 units is sold from 85 units at $30 and 35 units at $40 and 15 units at $50

So, for 5 units, the closing inventory would be

= 5 units × $50

= $250