Question

The following lots of Commodity Z were available for sale during the year. Beginning inventory 8 units at $50 First purchase 19 units at $51 Second purchase 51 units at $57 Third purchase 15 units at $57 The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year according to the LIFO method

Answer 1

The ending inventory balance at the end of the year according to the LIFO method is $1,267.

Step-by-step explanation:

The Last-In, First-Out (LIFO) method is an inventory method under which the last unit to arrive in inventory is assumed to be sold first.

Since the firm uses the periodic system under which the inventory account is updated at the end of the accounting period, we have:

Ending inventory balance = 8 units at $50 from the beginning inventory + 17 units at $51 per units from the First purchase = (8 * $50) + (17 * $51) = $1,267