Question

The following pertains to the cost of a product carried in the inventory of the R Store:

• Inventory on hand, January 1                                          0 units
• Purchases, January 8                                                 2,200 units @ $162.00 per unit =     $356,400
• Purchases, January 19                                                   600 units @ $166.00 per unit =     $ 99,600
• Purchases, January 23                                                   200 units @ $168.00 per unit =     $ 33,600
• Purchases, January 26                                                1,000 units @ $170.00 per unit =     $170,000

4,000                                                      $659,600

• Sales, January 10                                                        1,200 units @ $500 per unit
• Sales, January 18                                                           600 units @ $500
• Sales, January 25                                                           100 units @ $500
• Sales January 30                                                            900 units @ $500

2,800                                      (2,800 x $500 = $1,400,000)

Calculate the following for the month of January AND/OR as of 01-31 under each of the following assumptions:

• R uses a perpetual LIFO costing method. R makes sure that exactly 100% of its COGAS ends up either as EI or COGS.

EI:                                                                         

COGS:                                                                  

Gross profit:                                                        

Answer 1

Based on given details, calculation is as follows

	Units	Inventory Value
Ending Inventory	1,200.00	$     198,200.00
COGS	2,800.00	$     461,400.00
Sales	2,800.00	$ 1,400,000.00
Gross Profit		$     938,600.00

Tables to calculate the LIFO based inventory valuation

Date	Description	Units	Unit cost	Value		Bal Unit	Bal Cost
8-Jan	Purchase	2,200.00	$ 162.00	$ 356,400.00		2,200.00	$ 356,400.00
10-Jan	Sales	-1,200.00	$ 162.00	$(194,400.00)		1,000.00	$ 162,000.00
18-Jan	Sales	-600.00	$ 162.00	$   (97,200.00)		400.00	$   64,800.00
19-Jan	Purchase	600.00	$ 166.00	$    99,600.00		1,000.00	$ 164,400.00
23-Jan	Purchase	200.00	$ 168.00	$    33,600.00		1,200.00	$ 198,000.00
25-Jan	Sales	-100.00	$ 168.00	$   (16,800.00)		1,100.00	$ 181,200.00
26-Jan	Purchase	1,000.00	$ 170.00	$ 170,000.00		2,100.00	$ 351,200.00
30-Jan	Sales	-900.00	$ 170.00	$(153,000.00)		1,200.00	$ 198,200.00