The Elston Company uses a periodic inventory system.Relevant inventory information for the year follows: $\begin{array}{llr}
1 / 1 & \text { Beginning inventory } & 20 \text { units@ } \$ 170 \text { per unit } \
5 / 23 & \text { Purchased } & 20 \text { units@ } \$ 125 \text { per unit} \
11 / 5 & \text { Purchased } & 400 \text { units@ } \$ 160 \text { per unit } \
11 / 18 & \text { Purchased } & 100 \text { units@ } \$ 175 \text { per unit }
\end{array}$ At year-end, 50 units remain in inventory.What is the cost of the ending inventory on a LIFO basis?
A)$7, 500
B)$7, 100
C)$8, 750
D)$8, 450

Question

The Elston Company uses a periodic inventory system.Relevant inventory information for the year follows: $\begin{array}{llr}
1 / 1 & \text { Beginning inventory } & 20 \text { units@ } \$ 170 \text { per unit } \
5 / 23 & \text { Purchased } & 20 \text { units@ } \$ 125 \text { per unit} \
11 / 5 & \text { Purchased } & 400 \text { units@ } \$ 160 \text { per unit } \
11 / 18 & \text { Purchased } & 100 \text { units@ } \$ 175 \text { per unit }
\end{array}$  At year-end, 50 units remain in inventory.What is the cost of the ending inventory on a LIFO basis?
A)$7, 500
B)$7, 100
C)$8, 750
D)$8, 450

Quizplus · Accepted Answer

Under LIFO, the last items purchased are the first to be used. The ending inventory of 50 units would consist of the earliest purchases: 20 units from 1/1 at $170 each and 30 units from 5/23 at $125 each. (20 x $170) + (30 x $125) = $7,500.

The Elston Company Uses a Periodic Inventory System At Year-End, 50 Units Remain in Inventory