Question

Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $888,000 (37,000 units at $24 each). During 2021, 114,000 units were purchased, all at the same price of $29 per unit. 117,000 units were sold during 2021. Calculate the December 31, 2021, ending inventory and cost of goods sold for 2021 based on a periodic inventory system.

Answer 1

Answer:

the ending inventory and cost of goods sold for 2021 based on a periodic inventory system is $816,000 and $3,378,000 respectively

Explanation:

The computation is shown below

Cost of goods sold is

= (117,000 units - 114,000 units) × $24 + 114,000 units × $29

= 3,000 units × $24 + 114,000 units × $29

= $72,000 + $3,306,000

= $3,378,000

And, the ending inventory is

= (37,000 units - 3,000 units) × $24

= $816,000

Hence, the ending inventory and cost of goods sold for 2021 based on a periodic inventory system is $816,000 and $3,378,000 respectively