Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual LIFO inventory method,what is the value of inventory after the October 4 sale?
A)$3,485.
B)$3,445.
C)$3,500.
D)$3,472.
E)$3,461.

Question

Quizplus · Accepted Answer

Under the perpetual LIFO (Last In, First Out) method, the most recently purchased items are sold first. On October 4, 11 units are sold. The cost of the sold units would be calculated from the latest purchases before the sale. The 20 units purchased on October 2 at $205 each are the latest, so the cost of the 11 sold units is calculated from this batch. The calculation for the cost of goods sold (COGS) and remaining inventory is as follows:- 11 units sold from the October 2 purchase at $205 each = 11 * $205 = $2,255.- Remaining inventory: 9 units from the October 2 purchase at $205 each + 8 units from the October 1 inventory at $200 each.- Value of remaining inventory: (9 * $205) + (8 * $200) = $1,845 + $1,600 = $3,445.Therefore, the value of the inventory after the October 4 sale, using the perpetual LIFO method, is $3,445.

Starlight Company Has Inventory of 8 Units at a Cost