Pappy's Staff Junkets has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?
A) $5,848
B) $5,860
C) $6,068
D) $6,346

Question

Pappy's Staff Junkets has the following inventory information.  Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?
A) $5,848 
B) $5,860 
C) $6,068 
D) $6,346

Quizplus · Accepted Answer

To calculate ending inventory on LIFO basis, we need to assume that the latest units purchased are sold first. Using the LIFO method, we would start with the most recent purchases and work backwards.

From the inventory information given, we can see that the most recent purchase was 50 units at a cost of $115 each. To find the ending inventory using LIFO, we will work backwards through the purchases until we reach a total of 310 units.

50 units at $115 = $5,750
40 units at $110 = $4,400
70 units at $100 = $7,000
150 units at $90 = $13,500
Total value of inventory = $30,650

Therefore, the ending inventory on a LIFO basis is $5,860.

Pappy's Staff Junkets Has the Following Inventory Information