Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	320 units @ $17
5	Purchase	305 units @ $19
10	Sales		225 units @ $27
15	Purchase	185 units @ $20
24	Sales		175 units @ $28

Multiple Choice

$7,160

$6,960

$14,935

$7,640

$7,975

Answer 1

Solution :

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-May	320	$17.00	$5,440.00	0	$0.00	$0.00	0	$0.00	$0.00	320	$17.00	$5,440.00
5-May	320	$17.00	$5,440.00	305	$19.00	$5,795.00	0	$0.00	$0.00	320	$17.00	$5,440.00
										305	$19.00	$5,795.00
10-May	320	$17.00	$5,440.00	0	$0.00	$0.00	225	$19.00	$4,275.00	320	$17.00	$5,440.00
	305	$19.00	$5,795.00							80	$19.00	$1,520.00
15-May	320	$17.00	$5,440.00	185	$20.00	$3,700.00	0	$0.00	$0.00	320	$17.00	$5,440.00
	80	$19.00	$1,520.00							80	$19.00	$1,520.00
										185	$20.00	$3,700.00
24-May	320	$17.00	$5,440.00	0	$0.00	$0.00	175	$20.00	$3,500.00	320	$17.00	$5,440.00
	80	$19.00	$1,520.00							80	$19.00	$1,520.00
	185	$20.00	$3,700.00							10	$20.00	$200.00
Total									$7,775.00			$7,160.00

Hence value of ending inventory under LIFO = $7,100

Hence first option is correct.