Harris Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 280 \text { units at } \$ 72 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 150 \text { units at } \$ 76 \
\hline 30 \text { October } & \text { Sold } 125 \text { units } \
\hline
\end{array}$$
What would the cost of sales be as reported on the income statement for the year ending 31 December 2016 if the perpetual,last-in,first-out costing method is used?

Question

Harris Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 280 \text { units at } \$ 72 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 150 \text { units at } \$ 76 \
\hline 30 \text { October } & \text { Sold } 125 \text { units } \
\hline
\end{array}$$
What would the cost of sales be as reported on the income statement for the year ending 31 December 2016 if the perpetual,last-in,first-out costing method is used?

Quizplus · Accepted Answer

To calculate the cost of sales using LIFO perpetual method, we need to use the formula: 
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory

Beginning inventory (as given) = $5,040 
Purchases (as given) = $16,800 + $4,800 - $1,320 = $20,280 
Ending inventory (LIFO) = $6,480

Therefore, Cost of goods sold = $5,040 + $20,280 - $6,480 = $16,440

Harris Company Had the Following Balances and Transactions During 2016