Audrey Company uses the LIFO retail inventory method and reports the following information:
$\begin{array}{c}
\begin{array}{l}
\underline{\text { Retail }} \
\$ 900 \
1,000 \
4,500\
500 \
4,000
\end{array}
\begin{array}{lll}
\underline{\text {Cost}}\
\$540
\
\
\
\
3,150
\end{array}
\begin{array}{lll}
\
\text {Beginning inventory}\
\text { Net markups }\
\text {Sales}\
\text {Net markdowns}\
\text {Purchases}
\end{array}
\end{array}$

What is the cost of ending inventory for Audrey Company?

Question

Audrey Company uses the LIFO retail inventory method and reports the following information: 
$\begin{array}{c}
\begin{array}{l}
\underline{\text { Retail }} \
\$ 900 \
1,000 \
4,500\
500 \
4,000
\end{array}
\begin{array}{lll}
\underline{\text {Cost}}\
\$540
\
 \
\
\
3,150
\end{array}
\begin{array}{lll}
\
\text {Beginning inventory}\
\text { Net markups }\
\text {Sales}\
\text {Net markdowns}\
\text {Purchases} 
\end{array} 
\end{array}$

What is the cost of ending inventory for Audrey Company?

Quizplus · Accepted Answer

The cost of ending inventory is $540. This is because the LIFO retail inventory method assumes that the most recent purchases are the first to be sold. Therefore, the ending inventory is made up of the oldest purchases, which have a cost of $540.

Audrey Company Uses the LIFO Retail Inventory Method and Reports