Question

The following lots of Commodity Z were available for sale during the year. Beginning inventory 10 units at $49 First purchase 15 units at $55 Second purchase 53 units at $55 Third purchase 18 units at $57 The firm uses the periodic system, and there are 23 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year according to the LIFO method?

Answer 1

Answer:

$1,205

Explanation:

Given:

Beginning inventory = 10 units at $49

First purchase = 15 units at $55

Second purchase = 53 units at $55

Third purchase = 18 units at $57

Ending inventory of commodity is 23 units

Total purchases = 10 + 15 + 53 + 18 = 96 units

So, units of commodity Z sold = 96 - 23 = 73

Since, LIFO method is used, last commodity purchased would be sold first.

So, after selling 73 units, 13 units at $55 and 10 units at $49 is left as ending inventory.

Value of ending inventory = 13 × 55 + (10 × 49)

                                            = $1,205