Question

Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $500,000 (20,000 units at $25 each). During 2021, 80,000 units were purchased, all at the same price of $30 per unit. 85,000 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:

COGS = $2,525,000

$375,000

Explanation:

LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.

COGS = (80,000 X $30) + (5000 X $25) = $2,525,000

Ending inventory would comprise of jan. 1 inventory less 5000

15000 x 25 = 375000