Question
In: Accounting
The inventory records for Tiny Tim Creations Inc. indicate the following activity for the month of...
The inventory records for Tiny Tim Creations Inc. indicate the following activity for the month of January:
January 1 balance,
1000 units @ $7.20 each
Purchases:
January 10: 600 units @ $7.25 each
January 16: 800 units @ $7.30 each
January 23: 600 units @ $7.35 each
Sales:
January 5: 400 units
January 14: 700 units
January 20: 500 units
January 26: 700 units
1. January 31st ending inventory using unit LIFO in a perpetual inventory system is:
A) $4,960
B) $5,060
C) $5,080
D) $5,140
Solutions
Expert Solution
The right option is " B) $5,060 ".
Ending inventory using unit LIFO in a perpetual inventory system:
| Opening inventory | Purchases | Sales | Ending inventory | |||||||||
| Date | units | Cost per unit | Total cost | units | Cost per unit | Total cost | units | Cost per unit | Total cost | units | Cost per unit | Total cost |
| January 1 | 1,000 units | $7.20 | $7,200 | - | - | - | - | - | - | 1,000 units | $7.20 | $7,200 |
| January 5 | 1,000 units | $7.20 | $7,200 | - | - | - | 400 units | $7.20 | $2,880 | 600 units | $7.20 | $4,320 |
| january 10 | 600 units | $7.20 | $4,320 | 600 units | $7.25 | $4,350 | - | - | - | 600 units | $7.20 | $4,320 |
| 600 units | $7.25 | $4,350 | ||||||||||
| "january 14 | 600 units | $7.20 | $4,320 | - | - | - | 600 units | $7.25 | $4,350 | 500 units | $7.20 | $3,600 |
| 600 units | $7.25 | $4,350 | 100 units | $7.20 | $720 | |||||||
| january 16 | 500 units | $7.20 | $3,600 | 800 units | $7.30 | $5,840 | - | - | - | 500 units | $7.20 | $3,600 |
| 800 units | $7.30 | $5,840 | ||||||||||
| "january 20 | 500 units | $7.20 | $3,600 | - | - | - | 500 units | $7.30 | $3,650 | 500 units | $7.20 | $3,600 |
| 800 units | $7.30 | $5,840 | 300 units | $7.30 | $2,190 | |||||||
| January 23 | 500 units | $7.20 | $3,600 | 600 units | $7.35 | $4,410 | - | - | - | 500 units | $7.20 | $3,600 |
| 300 units | $7.30 | $2,190 | 300 units | $7.30 | $2,190 | |||||||
| 600 units | $7.35 | $4,410 | ||||||||||
| January 23 | 500 units | $7.20 | $3,600 | - | - | - | 600 units | $7.35 | $4,410 | 500 units | $7.20 | $3,600 |
| 300 units | $7.30 | $2,190 | 100 units | $7.30 | $730 | 200 units | $7.30 | $1,460 | ||||
| 600 units | $7.35 | $4,410 | ||||||||||
Total cost of ending inventory = ( 500 units @ $7.20 ) + ( 200 units @ $7.30 ) = $5,060
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