Question

1. Under the periodic inventory system, Village Fabrics purchased 25 yards of blue plaid fabric at a cost of $2.00 per yard on June 1; on June 3, 22 yards were sold of the blue plaid; a new shipment came in with 25 more yards at a cost of $1.25 per yard on June 5; on June 15, 17 yards of the blue plaid fabric were sold; Village Fabrics purchased another 25-yard bolt at a cost of $1.00 per yard on June 19; on June 27, 6 more yards had been sold. What is the value of inventory as of June 30 under the LIFO method?

   	a.	$31.25
   	b.	$60.00
   	c.	$56.25
   	d.	$50.00

Answer 1

• The correct answer is Option ‘c’ $ 56.25 = Cost of ending inventory under LIFO Periodic
• Workings

Units sold = 22 + 17 + 6 = 45

LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	25	$                   2.00	$                              50.00	0	$           2.00	$                        -	25	$           2.00	$                  50.00
Purchases:	0	$                       -	$                                     -
05-Jun	25	$                   1.25	$                              31.25	20	$           1.25	$                 25.00	5	$           1.25	$                     6.25
19-Jun	25	$                   1.00	$                              25.00	25	$           1.00	$                 25.00	0	$           1.00	$                         -
TOTAL	75		$                            106.25	45		$                 50.00	30		$                  56.25 = Answer