Question

Tamarisk has the following inventory data:

July 1 Beginning inventory 31 units at $6.20
5 Purchases 125 units at $6.90
14 Sale 83 units
21 Purchases 62 units at $7.50
30 Sale 58 units
Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?
a. $1007.70
b. $744.00
c. $1519.70
d. $512.00

Answer 1

Option A

Total cost of goods sold = $1,007.7

Step-by-step explanation:

Under the last -in-first-out (LIFO) method, inventory are priced using the price of the newest/latest batch in stock until a new batch is received after which the price of the new batch is used and this is continued.

So we apply the principle as follows:

$

July 14 sale of 83 units = 83× 6.90 = 572.7

July 30 sale of 58 units = 58× 7.50 = 435

Total cost of goods sold 1,007.7

Total cost of goods sold = $1,007.7