Question

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 amount of the inventory at the end of the year using the LIFO method? a. $1,805 b. $1,575 c. $3,815 d. $1,685

Answer 1

Answer: $1,575

Step-by-step explanation:

When using Last In First Out (LIFO) method of inventory valuation, it is assumed that the most current goods purchased are the ones to be sold first. This means that the remaining inventory are the earlier ones purchased.

25 units remain at the end of the year. These will therefore come from;

The 10 units of beginning Inventory at $60 each

The remaining 15 units will come from the first purchase at $65 each.

Amount of Inventory = (10 * 60) + (15 * 65)

= 600 + 975

= $1,575

I have attached the complete question.