1) A company had an inventory of 5 units u a cost of $20 each on November 1. On November 2, they...
Question:
1) A company had an inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at a cost of $22 each. On November 6 they purchased 10 units at a cost of $25 each. On November 8. they sold 18 units at a cost of $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?
a) $395
b) $410
c) $450
d) $510
e) $520
2) Given the following information, determine the cost of ending inventory on June 30 using the LIFO perpetual inventory method. Assume this is the first month of the company's operations:
June 1: 15 units were purchased at $20 per unit.
June 15: 12 units were sold.
June 29: 8 units were purchased for S25 per unit.
a) $200
b) $220
c) $260
d) $275
e) $300
Calculate Cost of Good Sold and Ending Inventory Under the LIFO Inventory Method
Companies carrying and selling inventories have several inventory valuation choices under generally accepted accounting principles. These choices include specific identification; weighted average; FIFO (first-in, first-out); and LIFO (last-in, last out). Under the LIFO method, especially under the LIFO perpetual inventory method, the last units in or purchased are the first units which are sold and expensed to cost of goods sold expense.
Answer and Explanation: 1
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Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average
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Chapter 6 / Lesson 11
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Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.
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