Problem 5-1 Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest on its savings account
1 answer:
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Answer:
$1150.
Explanation:
Given: Beginning inventory 10 units at $55
First purchase 25 units at $60
Second purchase 30 units at $65
Third purchase 15 units at $70.
First, lets calculate total units of inventory available.
Total inventory available for sales during the year=
∴ Total inventory available for sales during the year= 80 units
As given 60 units were sold out of total 80 units.
∴ 20 units of inventory is still remaining.
To determine the cost of unit sold, under LIFO accounting, you start with assumption that you have sold the most recent inventory and work backward.
As 20 units is still available after selling 60 units.
∴ The value of ending inventory=
The value of ending inventory=
∴ The value of ending inventory using LIFO is $1150.