Addison Inc. uses a perpetual inventory system. The following information about one inventory item for the...

Addison Inc. uses a perpetual inventory system. The following information about one inventory item for the month of september:

Sep. 1 Inventory 24 units at $15
         5 sold 17 units
        17 Purchased 10 units at $20
         30 sold 8 units

If Addison uses LIFO, the cost of the ending inventory on September 30 is

a. $160
b.$125
c. $180
d. $145

Please help! I don't understand. Due at 11:59 p.m. Thanks!

Expert Solution

Answer:

d. $ 145

Explanation:

Last-in, First-out Method
	Purchases	Sold	Balance
Date	Units	Rate	Amount	Units	Rate	Amount	Units	Rate	Amount
Opening							24	$ 15	$ 360

Sold				17	$ 15.00	$ 255	7	$ 15	$ 105

Purchased	10	$ 20.00	$ 200				7	$ 15	$ 105
							10	$ 20	$ 200

Sold				8	$ 20.00	$ 160	7	$ 15	$ 105
							2	$ 20	$ 40
TOTAL	10			25		$ 415	9		$ 145

Clearly, option 'd' is correct and other options are incorrect.

In case of any doubt or clarification, you're welcome to come back via comments.

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