Question

Brief Exercise 8-8 LIFO method [LO8-4]

Esquire Inc. uses the LIFO method to value its inventory. Inventory at January 1, 2018, was $500,000 (25,000 units at $20 each). During 2018, 90,000 units were purchased, all at the same price of $27 per unit. 95,000 units were sold during 2018. Esquire uses a periodic inventory system.

Complete the below table to calculate the December 31, 2018, ending inventory and cost of goods sold for 2018.

	Cost of Goods Available for Sale COGS - Periodic LIFO Ending Inventory - Periodic LIFO # of units Cost per unit Cost of Goods Available # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beginning Inventory Purchases Total

Answer 1

		Cost of Goods Available for Sale			COGS - Periodic LIFO			Ending Inventory - Periodic LIFO
		# of units	Cost per unit	Cost of Goods Available	# of units	Cost per unit	Cost of Goods Available	# of units	Cost per unit	Cost of Goods Available
Beginning Inventory		25,000	$                  20	$         5,00,000	5,000	$                  20	$         1,00,000	20,000	$                  20	$         4,00,000
Purchases		90,000	$                  27	$      24,30,000	90,000	$                  27	$      24,30,000
Total		1,15,000		$      29,30,000	95,000		$      25,30,000	20,000		$         4,00,000
Working:
Under periodic inventory system, inventory records are updated at the end of period.
LIFO stands for last-in-first-out.It means inventory which is bought in last is sold first.
So, sales of 95,000 units is firstly from purchase made during the year and lastly from beginning inventory.