The Xu Corporation uses a periodic inventory system.The company has a beginning inventory of 300 units at $5 each on January 1.Xu purchases 500 units at $4 each in February and 200 units at $6 each in March.There were no additional purchases or sales during the remainder of the year. Xu sells 300 units during the quarter.If Xu uses the LIFO method,what is its cost of goods sold?

Question

Quizplus · Accepted Answer

Under the LIFO (Last-In, First-Out) method, the most recent purchases are sold first. Xu sells 300 units, so we calculate the cost of goods sold based on the most recent purchases: 200 units at $6 each ($1,200) and 100 units from the next most recent purchase at $4 each ($400). Total cost of goods sold = $1,200 + $400 = $1,600.

The Xu Corporation Uses a Periodic Inventory System