Question

Two items are purchased: 100 packs of felt pens at $4.00 each and 60 packs of felt pens at $3.80 each. (A pack contains 3 felt pens). Find the ending inventory if 50 packs were on hand at the end of the period in dollars.

Assume the 100 packs of felt pens bought at $4.00 each were purchased first, before the 60 packs of felt pens bought at $3.80 each. 50 packs were on hand at the end of the period.

Find the value of the ending inventory using LIFO in dollars.

Answer 1

The value of the ending inventory using the LIFO method is $428.

Explanation:

LIFO stands for "Last In, First Out" and assumes that the most recently acquired goods are the first to be sold. Based on the given information, we can calculate the ending inventory value using the LIFO method as follows:

First, calculate the cost of the 60 packs of felt pens purchased at $3.80 each:

60 packs × $3.80/pack = $228

Next, use the remaining 50 packs on hand, assuming they are from the first purchase of 100 packs at $4.00 each, to calculate the cost of those packs:

50 packs × $4.00/pack = $200

The total cost of the 110 packs of felt pens is:

$228 + $200 = $428

Therefore, the value of the ending inventory using the LIFO method is $428.