10^th Generation Electronics had two transformers in its inventory,one purchased in February for $11,800 and the other acquired in September for $13,300.In December,they sold one of the transformers to Ram Enterprises for $16,400 and reported a gross profit of $3,100.10^th Generation Electronics evidently uses the ________ inventory valuation method. A)FIFO B)LIFO C)Average D)Flexplus

Question

Quizplus · Accepted Answer

Since Generation Electronics sold one of the transformers in December, they would have used the LIFO (Last-in, First-out) inventory valuation method. This is because under LIFO, the most recently acquired inventory is assumed to be sold first, which would result in a higher cost of goods sold and a lower reported gross profit. This matches with the fact that Generation Electronics had a gross profit of $3,100 on the sale of the transformer to Ram Enterprises.

10th Generation Electronics Had Two Transformers in Its Inventory,one Purchased

10^th Generation Electronics Had Two Transformers in Its Inventory,one Purchased