Question

SlickCo begins operations in 20X1 uses the periodic method and LIFO costing, and purchases merchandise as follows

20X1	Units	Unit cost
March	450	$3.00
August	650	$3.50
20X2
February	550	$4.00
October	250	$5.00

If SlickCo sells 850 units in 20X1 and again in 20X2, cost of goods sold on the 20X2 income statement will be:

Select one:

a. $3,200

b. $3,400

c. $3,600

d. $3,800

Answer 1

Ans Is option C $ 3600

LIFO Method , which stands for last-in-first-out, is an inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year

20X1 ........................Unit.............. Unit Cost .............Total Cost

.................................................... $ /unit .............. $

Begining Inventory 0...................... 0...................... 0

Purchase

March .....................450............ 3.00 ...................350

August .......................650 ..............3.50 .................2275

Sales .......................650 .............3.50 ...............2275

................................200 ...............3.00 ..............600

Ending Inventory...... 250 ................3.00............... 750  

Year 20X2

Begining Inventory .250 ................3.00............... 750

Purchase

Feb ........................... 550................ 4.00.............2200

October ......................250................. 5.00............ 1250

Sales .....................250 ................. 5.00.......... 1250

.............................550 ...................4.00 ...........2200

..............................50....................... 3.00 ..........150

Ending Inventory ....200..................... 3.00............. 600   

Cost Of Good Sold ( Total Sales of 20X2 or Opening Stock Plus Purchases ) (1250+2200+150) = $3600