Question

The units of an item available for sale during the year were as follows: Jan 1 Inventory 22 units at 127 April 15 Purchase 138 units at 117 September 9 Purchase 27 units at 125 There are 42 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the last-in, first-out (LIFO)

Answer 1

Answer:

$5,134

Explanation:

LIFO assumes that the units to arrive last are sold first Therefore inventory value is based on earlier (old) prices.

Step 1 : Calculate units sold

Units sold = Units Available for sale - units in inventory

                 = 145 unit

Step 2 : Determine Inventory Value

Inventory value = 22 units x $127 + 20 units x $117

                          = $5,134

Conclusion

the inventory cost using the last-in, first-out (LIFO) is  $5,134