Mountain Made uses a periodic inventory system.The company started the month with 3 quilts in its beginning inventory that cost $200 each.During the month,Mountain Made purchased 20 additional quilts for $210 each.At the end of the month,Mountain Made counted its inventory and found that 5 quilts remained unsold.If Mountain Made uses LIFO periodic,its cost of goods sold for the month is:
A)$1,020.
B)$3,780.
C)$3,750.
D)$1,050.

Question

Quizplus · Accepted Answer

Under LIFO (Last-In, First-Out) periodic, the most recently purchased items are sold first. Mountain Made purchased 20 quilts at $210 each and had 3 quilts at $200 each from the beginning inventory. At the end of the month, 5 quilts remained, implying 18 quilts were sold (23 total - 5 unsold = 18 sold). Under LIFO, the cost of the sold quilts would be calculated by taking the cost of the 18 most recently purchased quilts. Since all 20 purchased quilts are newer than the beginning inventory, the cost of goods sold includes the 18 at $210 each: 18 quilts * $210 = $3,780.

Mountain Made Uses a Periodic Inventory System