The following data applies to a particular item of merchandise: $\begin{array}{lrr}
\text { On hand at start of period } & 300 & \$ 5.10 \
1^{\text {st }} \text { purchase } & 500 & 5.20 \
2^{\text {ndd }} \text { purchase } & 700 & 5.30 \
3^{\text {rd }} \text { purchase } & 600 & 5.50\\text { Number of units available for sale } & 2,100 \
\text { On hand at end of period } & \underline{500} \
\text { Number of units sold during period } & \underline{1,600}
\end{array}$ ? Of the 1,600 units sold during the period, 300 were from the beginning inventory; 500 from the first purchase; 600 from the second purchase; and 200 from the last purchase. Using the last-in, first-out costing method, the cost of goods sold would be

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Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. Therefore, the cost of goods sold includes 600 units from the second purchase at $5.30, 500 units from the first purchase at $5.20, 300 units from the beginning inventory at $5.10, and 200 units from the third purchase at $5.50. Calculating these gives: (600 x $5.30) + (500 x $5.20) + (300 x $5.10) + (200 x $5.50) = $8,570.

The Following Data Applies to a Particular Item of Merchandise