Question

Under the periodic inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27, 6 more yards had been sold. What is the value of inventory as of June 30 under the LIFO method

Answer 1

$56.25

Step-by-step explanation:

LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.

the inventory sold would be accounted for from the last purchased items

a total of 75 yards was bought and 45 were sold. This leaves 30 yards in the inventory .

the 30 yards would be accounted for using the cost of the fabrics bought on June 1 and 5

25 x $2 = 50

5 x $1.25 = $6.25

total = $50 + $6.25 = $56.25