Question

A company had inventory on November 1 of 5 units at a cost of $11 each. On November 2, they purchased 18 units at $13 each. On November 6 they purchased 14 units at $16 each. On November 8, 16 units were sold for $46 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale

Answer 1

$263

Explanation:

For the computation of the value of the inventory first we need to find out the ending inventory which is shown below:-

Ending inventory = 5 + 18 + 14 - 16

= 21

Value of ending inventory = Nov 1 units × Nov 1 cost) + ((Ending inventory - Nov 1 units) × Nov. 2 cost)

= (5 × $11) + ((21 - 5) × $13)

= 55 + 208

= $263

Therefore for computing the value of ending inventory we simply applied the above formula.