Question

Thorin Corp. began operations in 2017. It is a merchandiser of a single item - Product Q and uses the Periodic Inventory method. The following relates to purchases of Product Q during 2017:

Date Units Cost Per Unit Total Cost 1/02/17 400 $12 $4,800 1/16/17 300 $20 $6,000 3/18/17 600 $24 $14,400 6/25/17 300 $28 $8,400 10/16/17 300 $32 $9,600 12/16/17 100 $36 $3,600 Goods available for sale 2,000 $46,800 At 12/31/17, a physical inventory indicted 420 units of Product Q on hand. Assuming the LIFO method, cost of goods sold should be reported in the 12/31/17 income statement at:________.
a. $33,040
b. $36,972
c. $41,200
d. $41,760

Answer 1

Thorin Corp.

Assuming the LIFO method, cost of goods sold should be reported in the 12/31/17 income statement at:________.

= $41,600

Step-by-step explanation:

a) Data and Calculations:

Date Units Cost Per Unit Total Cost

1/02/17 400 $12 $4,800

1/16/17 300 $20 $6,000

3/18/17 600 $24 $14,400

6/25/17 300 $28 $8,400

10/16/17 300 $32 $9,600

12/16/17 100 $36 $3,600

12/31/17 2,000 Units available for sale $46,800

12/31/17 (1,580) Sales

12/31/17 420 Ending Inventory

Goods available for sale 2,000 $46,800

Ending Inventory is estimated to be =

1/02/17 400 $12 $4,800

1/16/17 20 $20 $400

Total 420 $5,200

Cost of goods sold = Cost of goods available for sale minus the estimated cost of Ending inventory = $46,800 - $5,200 = $41,600

b) Unfortunately, the dates of sales were not indicated, to enable the exact determination of the cost of goods sold under the LIFO method.