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Assume that Martinez Company has the following transactions in its first month of operations. Date Purchases...

Assume that Martinez Company has the following transactions in its first month of operations.

Date Purchases Sold Balance
Feb. 1 2,100 @ $3.60 2,100 units
Feb. 10 6,200 @ $3.95 8,300 units
Feb. 21 4,400 units 3,900 units
Feb. 28 2,100 @ $4.30 6,000 units


Martinez uses a perpetual inventory system.

Compute cost of goods sold and ending inventory at February 28, assuming that Martinez uses the LIFO cost flow assumption.

Cost of goods sold $
Ending inventory $

Solutions

Expert Solution

Store ledger Account LIFO

Date Receipts Issue Balance
Qty Price value Qty Price Value Qty Price Value
Feb1 2100 $3.60 $7560 2100 $3.60 $2100
2100 $3.60 $2100
Feb 10 6200 $3.95 $24490 2100 $3.60 $2100
6200 $3.95 $24490
8300 $26590
Feb 21 4400 $3.95 $17380 1800 $3.95 $7110
2100 $3.60 $2100
3900 $9210
Feb 28 2100 $4.30 $9030 2100 $4.30 $9030
1800 $3.95 $7110
2100 $3.60 $7560
6000 $23700

Cost of good sold under LIFO method is the last item purchased is also the first one sold. Thus, the Cost of goods sold = (4400Units*$3.95)=$17380  

And Ending inventory is (2100Units*$4.30)+ (1800Units*$3.95)+( 2100Units*$3.60)=23700

ekkarill92 answered 3 years ago
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