Final answer:
The ending balance in inventory on May 31 for item TCG46 using the LIFO method is $816, after accounting for sales and purchases during the month.
Step-by-step explanation:
The subject of this question is the calculation of the ending balance in inventory using the Last-In, First-Out (LIFO) method in the context of a perpetual inventory system. We are given transactions for the item TCG46 occurring in the month of May for a shop named Teacups Galore.
We begin with an inventory balance on May 1 of 306 units at $5 each. On May 5, 132 units are sold; under LIFO, we assume these were part of the 306 units at $5. Then, on May 10, 150 more units are purchased at $6 each.
On May 27, another 160 units are sold. Using LIFO, we first subtract the remaining 174 units (306 - 132) from the initial batch and then 160 - 174 = negative units, which indicates we need to subtract the sold units from the new batch of 150 units purchased on May 10th at $6 each. Thus, we sell 14 units (160 - 146) from the new batch.
Ending inventory will consist of the remaining batch. This means we have 136 units (150 - 14) from the May 10 purchase at $6 each, plus the unsold portion of our initial inventory, which is zero since all initial units were either sold or disposed.
Ending Inventory Calculation:
From May 10 Purchase: 136 units x $6 = $816
Ending Inventory Value: $816 (as all initial 306 units at $5 were sold or disposed)
The ending balance in inventory for item TCG46 on May 31 using the LIFO method is $816.