East Asia Inc., Hong Kong subsidiary of a US company, uses the periodic inventory system. At April 1, the inventory consisted of 600 units that cost HK$650 each. During the month, the company made two purchases: 900 units at HK$680 each and 450 units at HK$700 each. East Asia also sold 1,500 units during the month. Using the LIFO cost flow assumption, what is the amount of cost of goods sold for the month?

Question

Quizplus · Accepted Answer

Under LIFO, the last items purchased are the first to be sold. Therefore, the cost of goods sold includes 450 units at HK$700 and 900 units at HK$680, totaling HK$1,024,500.