Question

Charter Company, which uses the perpetual inventory method, purchases different letters for resale. Charter had a beginning inventory comprised of seven units at $4 per unit. The company purchased five units at $6 per unit in February, sold seven units in October, and purchased two units at $7 per unit in December. If Charter Company uses the LIFO method, what is the cost of its ending inventory

Answer 1

Ending inventory cost= $34

Step-by-step explanation:

Giving the following information:

Beginning inventory= 7 units for $4 per unit.

Purchased= 5 units for $6

Sold= 7 units

Purchased= 2 units for $7 each

Under the LIFO (last-in, first-out) method, the cost of ending inventory is calculated using the cost of the firsts units incorporated into inventory. The perpetual inventory system recognizes sales after it happens.

Ending inventory:

Beginning inventory= 7*4= 28

Purchased= 5*6= 30

Sold= (5*6) + (2*4)= (38)

Purchased= 2*7= 14

Ending inventory cost= $34