Hall & Co sells calculators.At the beginning of June 100 Z800 scientific calculators were on hand for which the firm had paid $20 each.Purchases and sales for the month were as follows.
Date Purchases Unit Cost Sales
Units units
June 3 120 $21
10 150 $22
29 180
If Hall & Co uses a periodic system with a LIFO cost flow assumption June's cost of sales for the Z800 scientific calculators is:

Question

Quizplus · Accepted Answer

Using the LIFO (Last In, First Out) cost flow assumption, we assume that the last items purchased are the first ones sold. To calculate cost of goods sold (COGS), we need to use the most recent purchase prices first.

On June 29, there were still 180 units left in inventory. These are the units that were purchased on June 10 for $22 each.

On June 10, we sold 150 units, which were the last 150 units purchased. These units were purchased for $22 each.

On June 3, we sold 100 units, which would have consisted of 100 of the beginning inventory units that were purchased for $20 each.

To calculate COGS, we need to use the most recent purchase prices ($22) for the units sold in June.

COGS = (150 x $22) + (100 x $22) = $3300 + $2200 = $5500

Therefore, the cost of sales for the Z800 scientific calculators in June is $3930 ($5500 - ($180 x $22)).

Hall & Co Sells Calculators