Question

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

Answer 1

$3,445

Step-by-step explanation:

Let's first organize the data provided in the question:

Oct 1: inventory, 8 units, $200 each

Oct 2: purchase, 20 units, $205 each

Oct 4: sale, 11 units

Since we are asked to use the LIFO (Last-In, First-Out) method...

the 11 units sold were taken from the Oct 2 purchase... which leaves:

8 units at $200 each from initial inventory (8 x $200 = $1,600)

and 9 units from Oct 2 purchase, at $205 each (9 * $205 = $1,845)

Total value of the inventory: $1,600 + $1,845 = $3,445