The Lang Company started the year with 300 units in inventory, which cost $2 each. During January, it bought 700 units, which cost $3 each. During January, it sold 800 units. The amount the Lang Company should show as the value of the 200 items left in its ending inventory, using the LIFO method, is
A) 400
B) 500
C) 540
D) 600

Question

Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. Lang Company sold 800 units, which means it sold all 700 units purchased at $3 each and 100 of the initial 300 units at $2 each. The remaining 200 units in inventory are from the initial stock, valued at $2 each, totaling $400.

The Lang Company Started the Year with 300 Units in Inventory