Question

In: Accounting

The following information was collected from the inventory records of a company for the month of...

The following information was collected from the inventory records of a company for the month of March, 2010. During March the company sold 90 units of its product at $25 per unit.

Date

Units

Unit Cost

Total Cost

Beginning inventory

March 1

15

$10.00

$150

Purchase

March 5

35

$12.00

$420

Purchase

March 10

70

$14.00

$980

Purchase

March 17

25

$15.00

$375


Determine cost of goods sold under LIFO for the month of March.

answer choices: 1285, 640, 1130, 795

Solutions

Expert Solution

The cost of goods sold under LIFO for the month of March is calculated as follows:

Date Purchase Sale Ending Inventory
March 1 Begining     15 units * $10 = $150
March 5 Purchase    35 units * $12 = $420    15 units * $10 = $150
    35 units * $12 = $420
March 10 Purchase    70 units * $14 = $980     15 units * $10 = $150
     35 units * $12 = $420
     70 units * $14 = $980
March 17 Purchase 25 units * $15 = $375    15 units * $10 = $150
    35 units * $12 = $420
    70 units * $14 = $980
    25 units * $15 = $375
March 31 Sale 15 units * $10 = $150 30 units * $14 = $420
35 units * $12 = $420      25 units * $15 = $375
40 units * $14 = $560
      55 units = $795

Ending Inventory = $795

Cost of goods sold under LIFO for the month of March is calculated as follows:

Cost of goods sold = Begining Inventory + Purchases - Ending Inventory

                           = $150 + ($420 + $980 + $375) - $795

                           = $150 + $1,775 - $795

                           = $1,130

Cost of goods sold under LIFO for the month of March is $1,130

So correct answer is an option (3) or $1,130


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