A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
A) $304
B) $296
C) $288
D) $280
E) $276

Question

Quizplus · Accepted Answer

Under the LIFO (Last In, First Out) perpetual inventory method, the most recently purchased items are sold first. On November 8, 8 units were sold. According to LIFO, the 6 units purchased on November 6 at $25 each and 2 units from the November 2 purchase at $22 each would be sold first. The remaining inventory would include 8 units from November 2 at $22 each and 5 units from November 1 at $20 each. The value of the remaining inventory is calculated as (8 units * $22) + (5 units * $20) = $176 + $100 = $276.

A Company Had Inventory on November 1 of 5 Units