Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the LIFO method,its cost of goods sold equals:
A)$1,200.
B)$1,100.
C)$600.
D)$500.

Question

Quizplus · Accepted Answer

Under the LIFO (Last In, First Out) method, the most recently purchased items are sold first. The last diamonds purchased were on September 23 for $600 each. Since one diamond was sold, its cost of goods sold would be $600, corresponding to one of the diamonds purchased on September 23.

Delta Diamonds Uses a Periodic Inventory System