Poole Company purchased two identical inventory items. One of the items, purchased in January, cost $50. The other, purchased in February, cost $66. One of the items was sold in March at a selling price of $190. Poole uses LIFO. Which of the following statements is true?

Question

Quizplus · Accepted Answer

Under LIFO (Last-In, First-Out), the last item purchased is the first one to be sold. Therefore, the item purchased in February for $66 is considered sold. The gross margin is calculated as the selling price ($190) minus the cost of goods sold ($66), resulting in a gross margin of $124.

Poole Company Purchased Two Identical Inventory Items