Question

Priscilla has the following inventory information.

Answer 1

Answer:

$1,330

Explanation:

According to the LIFO method, the last inventory in should be the first out. That is, the units purchased at the 22nd should be the first sold, followed by the ones purchased at the 7th and then by the beginning inventory on July 1st.

The number of units sold during July is:

$n=20+70+10-35\\n=65\ units$

Using LIFO, the amount allocated to those goods should come from 10 units at $23 and 55 units at $20:

$COGS = 10*\ 23+55*\ 20\\COGS = \ 1,330$

Therefore, the amount allocated to cost of goods sold for July is $1,330.

None of the alternatives provided are correct.

Answer 2

Answer:

$1,330

Explanation:

July    operation                     units          unit price            total

1         Beginning Inventory    20                 $19                 $380

7        Purchases                     70                $20               $1,400

22     Purchases                     10                 $23                 $230  

Total                                       100                                     $2,010

31      Ending balance             35        

                                                20                  $19                  $380

                                                15                   $20                 $300

Total                                        35                                           $680

Cost of goods sold = total inventory purchases - ending balance (using LIFO) = $2,010 - $680 = $1,330

when you use last in, first out (LIFO) the last units purchased are the first units to be sold.

Cost of goods sold

10 units x $23 = $230

55 units x $20 = $1,100

total                     $1,330