Question

Assume Smart Touch Learning had 9 tablets in its beginning​ inventory, each with a cost of $ 230. On January ​3, Smart Touch Learning purchased 10 tablets at a cost of $ 314 each. On January ​10, Smart Touch learning sold 9 tablets to a customer. If the company is using the LIFO​ method, what is its ending inventory balance on January ​10?

Answer 1

Using LIFO, Smart Touch Learning's ending inventory on January 10 consists of their beginning inventory of 9 tablets at $230 each, totaling $2070.

Step-by-step explanation:

The Last In, First Out (LIFO) method of inventory valuation assumes that the most recently purchased items are sold first. To calculate the ending inventory balance for Smart Touch Learning on January 10, we need to consider the tablets that remain after the sale.

• Beginning inventory: 9 tablets $230 = $2070
• Purchase on January 3: 10 tablets $314 = $3140
• Sale on January 10: 9 tablets sold

Using LIFO, the 9 tablets sold will be the ones purchased on January 3 for $314 each. Therefore, the ending inventory will consist of the 9 tablets from the beginning inventory (since none from the beginning inventory were sold).

Ending Inventory = Beginning Inventory = 9 tablets $230 = $2070.