Question

A company purchased 100 units for $30 each on january 31. it purchased 400 units for $20 each on february 28. it sold a total of 470 units for $110 each from march 1 through december 31. if the company uses the last-in, first-out inventory costing method, calculate the amount of ending inventory on december 31. (assume that the company uses a perpetual inventory system.)

Answer 1

The answer is "$900".

A company purchased 100 units for $30 each on January 31.
it purchased 400 units for $20 each on February 28.
it sold a total of 470 units for $110 each from march 1 through December 31.
method used = last-in, first-out inventory costing method
it means last 400 units from February and 70 units from January were sold.
So, only 30 units left from January that are for $30 each.
Thus, the amount of ending inventory on December 31 = 30 x $30 =$900