Elly Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: $$\begin{array} { l c c r }
& \text { Units } & \text { Per unit price } & \text { Total } \
\hline\text { Balance, } 1 / 1 / 16 & 200 & \$ 5.00 & \$ 1,000 \
\text { Purchase, } 1 / 15 / 16 & 100 & 5.30 & 530 \
\text { Purchase, } 1 / 28 / 16 & 100 & 5.50 & 550
\end{array}$$ An end of the month (1/31/16) inventory showed that 150 units were on hand. If the company uses LIFO what is the value of the ending inventory?

Question

Elly Company uses a periodic inventory system. Details for the inventory account for the month of January 2016 are as follows: $$\begin{array} { l c c r } 
& \text { Units } & \text { Per unit price } & \text { Total } \
\hline\text { Balance, } 1 / 1 / 16 & 200 & \$ 5.00 & \$ 1,000 \
\text { Purchase, } 1 / 15 / 16 & 100 & 5.30 & 530 \
\text { Purchase, } 1 / 28 / 16 & 100 & 5.50 & 550
\end{array}$$ An end of the month (1/31/16) inventory showed that 150 units were on hand. If the company uses LIFO what is the value of the ending inventory?

Quizplus · Accepted Answer

Under LIFO, the last items purchased are the first to be used. Therefore, the ending inventory of 150 units would consist of the oldest costs: 100 units from the beginning balance at $5.00 each and 50 units from the January 15 purchase at $5.30 each. This results in a total value of $750 (100 units x $5.00 + 50 units x $5.30).

Elly Company Uses a Periodic Inventory System An End of the Month (1/31/16) Inventory Showed That 150