Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO.

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	260 units @ $11
5	Purchase	275 units @ $13
10	Sales		195 units @ $21
15	Purchase	155 units @ $14
24	Sales		145 units @ $22

Answer 1

Date	Units	Unit Cost	Total Cost
May-01	260	11	2,860
May-05	275	13	3,575
May-15	155	14	2,170
Total	690		8,605

Cost of goods available for sale = $8,605

Number of units sold = 195+145

= 340

Ending inventory = Number of units available for sale - Number of units sold

= 690-340

=350

As per LIFO method, ending inventory consists of the units purchased at the earliest.

Hence, cost of ending inventory will be calculated as under:

Date	Units	Unit Cost	Total Cost
May-01	260	11	2,860
May-05	90	13	1,170
Total	350		4,030

Cost of ending inventory is $4,030.

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