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 2 years ago

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