In: Accounting
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
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 |