Question

A company had the following purchases and sales during Its first year of operations:

January: 15 units at $160 8 units February: 25 units at $165 10 units May: 20 units at $170 14 units September: 17 units at $175 13 units November: 15 units at $180 18 units On December 31, there were 29 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
a. $4,790.
b. $9,640
c. $6,113.

Answer 1

a. $4,790.

Step-by-step explanation:

For LIFO we decrease from each month purchase the sales for the month as we sale the newest units first.

January: 15 units at $160 8 units

15 - 8 = 7 units left

February: 25 units at $165 10 units

25 - 10 = 15 units left

May: 20 units at $170 14 units

20 - 14 = 6 units left

September: 17 units at $175 13 units

17 - 13 = 4 units

November: 15 units at $180 18 units

15 - 18 = -3 units

As we more than we purchase we take units from the previous month:

September 4 units - 3 = 1 left

Ending Inventory

7 units at $ 160 = 1,120

15 units at $ 165 = 2,475

6 units at $ 170 = 1,020

1 units at $ 175 = 175

total 4,790