Question

Ultra Co. uses a periodic inventory system. The following are inventory transactions for the month of January: 1/1 Beginning inventory 20,000 units at $13 1/20 Purchase 30,000 units at $15 1/23 Purchase 40,000 units at $17 1/31 Sales at $20 per unit 50,000 units Ultra uses the LIFO method to determine the value of its inventory. What amount should Ultra report as cost of goods sold on its income statement for the month of January?

Answer 1

$830,000

Step-by-step explanation:

Ultra Co.'s inventory for January:

Date Number of units Unit balance Unit cost Total cost

January 1 20,000 20,000 $13 $260,000

January 20 30,000 50,000 $15 $710,000

January 23 40,000 90,000 $17 $1,390,000

January 31 (50,000) ($16.60) ($830,000)

Ending inventory 40,000 $560,000

Using the last-in, first-out (LIFO) method, the COGS = (40,000 units x $17 per unit) + (10,000 units x $15 per unit) = $680,000 + $150,000 = $830,000