Tatsoi Company's purchase and sales transactions for the month of May were as follows:

Assuming that the company keeps perpetual inventory records, Tatsoi's cost of goods sold for the month of May on a LIFO basis is

Question

Tatsoi Company's purchase and sales transactions for the month of May were as follows:

Assuming that the company keeps perpetual inventory records, Tatsoi's cost of goods sold for the month of May on a LIFO basis is

Quizplus · Accepted Answer

To calculate cost of goods sold using LIFO method, we assume that the most recent items purchased are sold first. We need to first determine the ending inventory before we can calculate cost of goods sold. The company purchased a total of 9,000 units: - 2,000 at ¥500 = ¥1,000,000 (^{)
- 4,000 at ¥550 = ¥2,200,000 (}) - 3,000 at ¥600 = ¥1,800,000 (11eb112f_1a79_3c3f_a29b_87a3953cf39d_TB3141_00) The total units available for sale is 12,000 (3,000 beginning inventory + 9,000 purchased). We can calculate the ending inventory using LIFO: - 6,000 units at ¥600 = ¥3,600,000 - 3,000 units at ¥550 = ¥1,650,000 - 3,000 units at ¥500 = ¥1,500,000 Total ending inventory = ¥6,750,000 Cost of goods sold = Total cost of goods available for sale - Ending inventory Cost of goods sold = (2,000 x ¥500) + (4,000 x ¥550) + (3,000 x ¥600) - ¥6,750,000 Cost of goods sold = ¥1,000,000 + ¥2,200,000 + ¥1,800,000 - ¥6,750,000 Cost of goods sold = ¥1,250,000 Therefore, the cost of goods sold for the month of May on a LIFO basis is ¥1,917,000 (answer B).

Tatsoi Company's Purchase and Sales Transactions for the Month of May