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A company had the following purchases and sales during its first year of operations: Purchases Sales January: 28 units at $210 19 units February: 38 units at $215 18 units May: 33 units at $220 22 units September: 30 units at $225 21 units November: 28 units at $230 35 unitsOn December 31, there were 42 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

User Kristofor
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2 Answers

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Final answer:

Using the Perpetual LIFO inventory valuation method, the cost of the ending inventory is $3,500.

Step-by-step explanation:

The Perpetual LIFO (Last-In, First-Out) inventory valuation method assumes that the most recent purchases are the first ones to be sold. In this case, the company had the following sales throughout the year:

January: 19 units

February: 18 units

May: 22 units

September: 21 units

November: 35 units

Based on the perpetual LIFO method, the cost of the ending inventory can be calculated by summing up the cost of the remaining units from each purchase:

January: 9 units remaining (28 - 19) x $210 = $1,890

February: 0 units remaining (38 - 18) x $215 = $0

May: 0 units remaining (33 - 22) x $220 = $0

September: 0 units remaining (30 - 21) x $225 = $0

November: 7 units remaining (28 - 35) x $230 = $1,610

Adding up these costs, the total cost of the ending inventory is $1,890 + $0 + $0 + $0 + $1,610 = $3,500.

User Yalian
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3 votes

Answer:

$12,245

Step-by-step explanation:

January:

Total value = Units left in inventory × cost per unit

= (28 - 19) × $210

= $1,890

February:

Total value = Units left in inventory × cost per unit

= (38 - 18) × $215

= $4,300

May:

Total value = Units left in inventory × cost per unit

= (33 - 22) × $220

= $2,420

September:

Total value = Units left in inventory × cost per unit

= (30 - 21) × $225

= $2,025

November:

Total value = Units left in inventory × cost per unit

= (35 - 28) × $230

= $1,610

Cost of the ending inventory:

= $1,890 + $4,300 + $2,420 + $2,025 + $1,610

= $12,245

User Nall
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