Question

Samson Company had the following balances and transactions during 2015.

January 1 - Beginning inventory: 20 units at $70 each
March 10 - Purchased 10 units at $80 each
June 10 - Sold 23 units for $100 each
What would Samson Company's inventory amount be on December 31, 2015 if the LIFO method was used?
A) $490
B) $510
C) $525
D) $560

Answer 1

Samson Company's inventory amount on December 31, 2015 using the LIFO method would be $560.

Step-by-step explanation:

The LIFO (Last-In, First-Out) inventory method assumes that the most recently purchased items are sold first. To calculate Samson Company's inventory amount on December 31, 2015 using the LIFO method, we need to determine the cost of the remaining units in inventory.

First, let's calculate the cost of units sold:

January 1 inventory: 20 units x $70 = $1400

March 10 purchase: 10 units x $80 = $800

Cost of units sold: $1400 + $800 = $2200

Next, let's calculate the remaining units in inventory:

Units remaining: 20 units + 10 units - 23 units sold = 7 units

Cost of remaining units: 7 units x $80 = $560

Therefore, Samson Company's inventory amount on December 31, 2015 using the LIFO method would be $560 (Option D).