Question

intext:"On December 31, there were 26 units remaining in ending inventory. Using the periodic LIFO inventory costing method, what is the value of cost of goods sold"

Answer 1

Answer:

Hi, the question you have provided is missing data on the Purchases and Available Inventory for Sale on the Company :

Here are the important principles to consider when calculating the value of Cost of Goods Sold using LIFO periodic Inventory Costing System.

LIFO stands for Last - In - First - Out. This method assumes that the last goods purchased are the first ones to be issued to the final customer or requisition department.

This means the valuation of inventory will be at the value of the earliest goods purchased and that the cost of goods sold will be at the latest prices.

Units Sold Calculation

In this question we are provided with Ending Inventory Balance of 26 units. Since its Periodic system, calculation of sales units will simply be Total Balance Available for Sale (Opening Balance plus Purchases) less Ending Balance of Inventory units.

Cost of Sales Calculation

Now with the units sold having been calculated, we have to use the principles of LIFO to make sure that of those units sold, last goods purchased are the first ones to be issued to the final customer.