Question

Assume Smart Touch Learning had 3 tablets in its beginning inventory, each with a cost of $300. On January 3, Smart Touch Learning purchased 4 tablets at a cost of $310 each. On January 10, Smart Touch learning sold 3 tablets to a customer. If the company is using the LIFO method, then the cost of goods sold on January 10 under a perpetual inventory system would be $910.

A. True
B. False

Answer 1

Using the LIFO method, the cost of goods sold for the three tablets sold on January 10 by Smart Touch Learning would be $930, not $910. Therefore, the given statement is false.

Step-by-step explanation:

If Smart Touch Learning is using the Last-In, First-Out (LIFO) method under a perpetual inventory system, the cost of the goods sold for the three tablets on January 10 would be calculated using the most recent inventory costs. Here's the step-by-step calculation: January 3 purchase:

4 tablets at $310 each. Since 3 tablets are sold on January 10, using LIFO, we take the cost of the 3 most recently purchased tablets. So, the cost of goods sold would be 3 tablets x $310 each = $930. Therefore, the statement that the cost of goods sold would be $910 is False.