Question

Melbourne Company uses the perpetual inventory system and LIFO cost flow method. Melbourne purchased 1,100 units of inventory that cost $6.50 each. At a later date, the company purchased an additional 1,200 units of inventory that cost $7.00 each. If the company sells 1,400 units of inventory, what amount of ending inventory will appear on a balance sheet prepared immediately after the sale

Answer 1

$5,850

Step-by-step explanation:

LIFO Method assumes that last goods purchased will be the first ones to be issued to the final customer. This means, valuation of inventory will begin using the value of the earliest goods purchased.

Ending Inventory Calculation:

Ending Inventory = 900 units × $6.50

= $5,850