Question

Perpetual Inventory Using LIFO - Determine the cost of goods sold for each sale and the inventory balance after each sale.

a) Exhibit 4
b) Dec. 31: 930 units, $43
c) Dec. 14: 1,860 units, $41
d) Dec. 10: 1,550 units, $41

Answer 1

With perpetual inventory using LIFO, the cost of goods sold for each sale and the inventory balance after each sale are determined based on the assumption that the most recent inventory purchases are the first ones sold.

Step-by-step explanation:

LIFO (Last-In, First-Out) is a method of inventory valuation. With perpetual inventory using LIFO, the cost of goods sold for each sale and the inventory balance after each sale are determined based on the assumption that the most recent inventory purchases are the first ones sold. Let's calculate the cost of goods sold and inventory balance for each sale:

a) Exhibit 4: Not enough information is provided to calculate the cost of goods sold and inventory balance.

b) Dec. 31: 930 units, $43: Cost of Goods Sold = 930 units x $43 = $39,990; Inventory Balance = Previous Inventory Balance - Cost of Goods Sold = Initial Inventory - Cost of Goods Sold = Initial Inventory - $39,990.

c) Dec. 14: 1,860 units, $41: Cost of Goods Sold = 1,860 units x $41 = $76,260; Inventory Balance = Previous Inventory Balance - Cost of Goods Sold = Previous Inventory Balance - $76,260.

d) Dec. 10: 1,550 units, $41: Cost of Goods Sold = 1,550 units x $41 = $63,550; Inventory Balance = Previous Inventory Balance - Cost of Goods Sold = Previous Inventory Balance - $63,550.