Melbourne Company uses the perpetual inventory system and LIFO cost flow method.Melbourne purchased 500 units of inventory that cost $4.00 each.At a later date,the company purchased an additional 600 units of inventory that cost $5.00 each.If the company sells 800 units of inventory,what amount of ending inventory will appear on a balance sheet prepared immediately after the sale?

Question

Quizplus · Accepted Answer

The last-in,first-out (LIFO)cost flow method requires that the cost of the items purchased last be charged to cost of goods sold.
Ending inventory units = 500 units + 600 units - 800 units sold = 300 units
Ending inventory = 300 units × $4.00 (earliest purchase)= $1,200

Melbourne Company Uses the Perpetual Inventory System and LIFO Cost