The following information should be used to answer questions 5 to 10 inclusive
An inventory ledger card shows the following details:
June 1 50 units in inventory at £20 per unit.
June 7 100 units purchased at a cost of £22.50
June 14 80 units sold at £48.00
June 21 50 units purchased at a cost of £25 per unit
June 22 60 units sold at £51.00
-What is the profit for the month of June, assuming the LIFO method of inventory valuation is used (to the nearest pound)?

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) assumes that the most recently purchased inventory is the first to be sold. Therefore, the cost of goods sold is calculated using the cost of the most recent purchases.June 22: 60 units sold at £51.00Cost of goods sold: 60 units x £25.00 = £1,500June 14: 80 units sold at £48.00Cost of goods sold: 20 units x £25.00 = £500Total cost of goods sold: £1,500 + £500 = £2,000Profit: £4,800 (revenue) - £2,000 (cost of goods sold) = £2,800

The Following Information Should Be Used to Answer Questions 5