A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Periodic LIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670.
B)$5,400.
C)$5,470.
D)$3,200.
E)$5,130.

Question

A company had the following purchases and sales during its first year of operations:  On December 31,there were 26 units remaining in ending inventory.Using the Periodic LIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670. 
B)$5,400. 
C)$5,470. 
D)$3,200. 
E)$5,130.

Quizplus · Accepted Answer

Using the periodic LIFO inventory valuation method, the cost of goods sold will be calculated by adding up the cost of the units sold, in reverse order of purchase, until the total number of units sold is reached.

The cost of the last 10 units sold will be $390 (10 * $39), the cost of the next 8 units sold will be $288 (8 * $36), and the cost of the final 8 units sold will be $224 (8 * $28). This gives a total cost of goods sold of $902.

To find the cost of the remaining 26 units in ending inventory, we need to add up the cost of each unit starting from the oldest to the most recent purchase until we reach 26 units. This gives a total cost of $5,568.

Therefore, the value of cost of goods sold is $902 and the answer is C.

A Company Had the Following Purchases and Sales During Its