Question

Determine the cost of goods sold for the transaction on September 8 using the perpetual inventory system and the LIFO method.

Date Item Units Cost Total
Beginning inventory 5 $5 $25
September 4 Purchase 8 6 48
September 8 Sale 6
September 20 Purchase 15 7 105
September 25 Sale 12
a. $31
b. $48
c. $36
d. $25

Answer 1

To find the COGS on September 8 using LIFO, all 6 units sold are taken from the most recent purchase on September 4, at $6 per unit, totaling $36. The correct answer to this question is c. $36.

Step-by-step explanation:

The student is asking to determine the cost of goods sold (COGS) for a sale that occurred on September 8 using the perpetual inventory system and the Last-In, First-Out (LIFO) method. To calculate COGS using LIFO, one would start from the most recent inventory purchase and work backwards until the entire quantity of the sale has been accounted for.

Based on the given data, on September 8, there was a sale of 6 units. Using LIFO, we would first take the 8 units purchased on September 4 at $6 each. Since we are selling only 6 units, all 6 will come from this batch. Therefore, the cost of the 6 units sold on September 8 is calculated by multiplying 6 units by the purchase cost of $6 per unit, totaling $36.