Eversoll Inc.uses the periodic inventory system. If Eversoll uses the LIFO inventory method, the cost of goods sold for June would be

Question

Eversoll Inc.uses the periodic inventory system.  If Eversoll uses the LIFO inventory method, the cost of goods sold for June would be

Quizplus · Accepted Answer

To calculate cost of goods sold using LIFO method, we assume that the last items purchased are sold first. 
Beginning inventory: $360
Add purchases: $1,540
Total: $1,900
June sales: $2,100
Ending inventory: $728 (12 units left at $61 each)
Using LIFO, we assume the last units purchased were sold first. Therefore, we begin with the most recent purchase of 6 units @ $64 each, then move to the purchase of 10 units @ $63 each, and so on.

6 units @ $64 = $384 
6 units @ $63 = $378 
2 units @ $62 = $124 
5 units @ $61 = $305

Total cost of goods sold = $1,191

Therefore, the answer is C) $2,272.50.