Question

In: Accounting

LetterCo, which uses the periodic inventory method, purchases different letters for resale. LetterCo had no beginning...

LetterCo, which uses the periodic inventory method, purchases different letters for resale. LetterCo had no beginning inventory. It purchased A thru G in January at $4 per letter. In February, it purchased H thru L at $6 per letter. It purchased M thru R in March at $7 per letter. It sold A, D, E, H, J and N in October. There were no additional purchases or sales during the remainder of the year.

If LetterCo uses the LIFO method, what is the cost of its ending inventory?

Multiple Choice

  • $76

  • $58

  • $42

  • $24

Solutions

Expert Solution

Correct answer-----------$58

Working

Units Cost per unit value
Beginning Balance $ 0
Purchases
A-G 7 $                     4.00 $ 28
H-L 5 $                     6.00 $ 30
M-R 6 $                     7.00 $ 42
Cost of goods available for sale 18 $ 100

.

LIFO
Total Units Available for sale 18
Units Sold 6
Closing Stock in Units 12
Valuation
Ending Inventory 7 @ $               4.00 $ 28
5 @ $               6.00 $ 30
Value Of Ending Inventory $                    58

ekkarill92 answered 2 years ago
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