Question

A company purchased 300 units for $20 each on January 31. It purchased 200 units for $40 each on February 28. It sold a total of 250 units for $110 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, calculate the cost of ending inventory on December 31. (Assume that the company uses a perpetual inventory system.)

Answer 1

Correct Answer:

Ending Inventory = $ 5,000.00

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	300	$                     20.00	$                     6,000.0
Purchases	200	$                     40.00	$                     8,000.0
Total	500		$                       14,000

	LIFO
A	Total Units Available for sale			500			$               14,000
	Units Sold			250
	Ending Inventory Units			250
	Valuation
	Cost of Goods Sold		200		$                         40.00		8,000.00
			50		$                         20.00		1,000.00
B	Cost of Goods Sold		250	units			$            9,000.00
A-B	Ending Inventory		250	units			$            5,000.00