Checkers uses the periodic inventory system.For the current month, the beginning inventory consisted of 1,200 units that cost $12 each.During the month, the company made two purchases: 500 units at $13 each and 2,000 units at $13.50 each.Checkers also sold 2,150 units during the month.Using the LIFO method, what is the ending inventory?

Question

Quizplus · Accepted Answer

Using the LIFO method, the last units purchased are considered to be sold first. Therefore, the cost of goods sold would be calculated as follows:

- 2,000 units at $13.50 each = $27,000
- 150 units (the remaining from the 2,000 units) at $13 each = $1,950
- 500 units at $13 each = $6,500
Total cost of goods sold = $35,450

To calculate the ending inventory, we need to start with the most recent purchases and work backward until we have accounted for all the units.

- 350 units (the remaining from the purchase of 500 units) at $13 each = $4,550
- 1,200 units at $12 each (beginning inventory) = $14,400
Total ending inventory = $18,950

Checkers Uses the Periodic Inventory System