Question

The following units of a particular item were available for sale during the calendar year:

Jan. 1 Inventory 4,000 units at $40
Apr. 19 Sale 2,500 units
June 30 Purchase 4,500 units at $44
Sept. 2 Sale 5,000 units
Nov. 15 Purchase 2,000 units at $46
The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the last-in, first-out method.

Answer 1

The cost of goods sold for eachs ale and the inventory balance after each sale, assuming the LIFO (last-in, first-out) method:

Cost of goods sold Ending Inventory

Apr. 19 Sale $100,000 $60,000

Sept. 2 Sale $218,000 $40,000

Step-by-step explanation:

a) Data and Calculations:

Date Description Units Unit Cost Total Balance

Jan. 1 Inventory 4,000 $40 $160,000

Apr. 19 Sale (2,500) (100,000) $60,000

June 30 Purchase 4,500 $44 198,000 258,000

Sept. 2 Sale (5,000) (218,000) 40,000

Nov. 15 Purchase 2,000 $46 92,000 132,000

Cost of goods sold: Ending Inventory

April 19: = 2,500 * $40 = $100,000 = 1,500 * $40 = $60,000

Sept 2: = 4,500 * $44 + 500 * $40 = 1,000 * $40 = $40,000

= $198,000 + $20,000

= $218,000