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1 vote
Atom company just began business and made the following four inventory purchases in june:

june 1 150 units $ 990
june 10 200 units 1,344
june 15 200 units 1,368
june 28 150 units 1,062
$4,764
a physical count of merchandise inventory on june 30 reveals that there are 200 units on hand. using the lifo inventory method, the value of the ending inventory on june 30 is?
a. $1,320.
b. $1,416.
c. $1,404.
d. $1,326.

1 Answer

6 votes

The value of the ending inventory on June 30, using the LIFO method, is $3,771. This is determined by working backward from the most recent purchase to the physical count on June 30, considering remaining units and their respective values.

All options are incorrect.

The Last In, First Out (LIFO) inventory method assumes that the most recently acquired inventory is sold first. In this scenario, the company made four inventory purchases in June. To calculate the ending inventory using the LIFO method, we start with the units from the last purchase and work backward until reaching the physical count on June 30.

June 28 Purchase (150 units at $1,062):

Remaining units after sale: 150 units

Remaining value: $1,062

June 15 Purchase (50 units at $7.50 per unit):

Remaining units after sale: 150 + 50 = 200 units

Remaining value: $1,062 + $375 = $1,437

June 10 Purchase (200 units at $6.72 per unit):

Remaining units after sale: 200 units

Remaining value: $1,437 + $1,344 = $2,781

June 1 Purchase (150 units at $6.60 per unit):

Remaining units after sale: 50 units

Remaining value: $2,781 + $990 = $3,771

Therefore, the value of the ending inventory on June 30, considering the LIFO method, is $3,771 for 50 units. If the physical count on June 30 reveals 200 units, the remaining 150 units would have the same value, resulting in a total ending inventory value of $3,771.

User Mark Nunes
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