Following is the inventory activity for July: Beginning Balance 10 sweaters @ $12 each 1-Jul:...

Question:

Following is the inventory activity for July:

Beginning Balance 10 sweaters @ $12 each

1-Jul: Purchased 5 sweaters at $14 each

8-Jul: Purchased 8 sweaters at $17 each

17-Jul: Purchased 6 sweaters at $20 each

24-Jul: Sold 12 sweaters for $30 each

What is the ending inventory $ amount using the LIFO method?

a. $298

b. $224

c. $261

LIFO Method:

LIFO method stands for the last in first out, it means last purchase goods are sold first. There are other two methods of stock valuation such as FIFO( first in first out.) and the weighted average cost method. LIFO follow the rules and regulation as specified in generally accepted accounting principle (GAAP).

Answer and Explanation: 1

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The ending inventory $ amount using the LIFO method is as follows:

Ending Inventory = 10 + 5 + 8 + 6 -12

= 17 Units

Ending Inventory Cost =

= 10 *...

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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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