Eaton Electronics uses a periodic inventory system.On March 31,Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894).In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).In June,Eaton sells two of these TVs (serial numbers 11534894 and 11542631).There were no additional purchases or sales during the remainder of the year. Eaton Electronics uses the LIFO method.What is the cost of its ending inventory?

Question

Quizplus · Accepted Answer

Under the LIFO (Last-In, First-Out) method, the most recently purchased items are sold first. At the end of the year, Eaton Electronics has 9 TVs in inventory (2 from March, 4 from April, and 5 from May, with 2 sold in June). The ending inventory will include the 2 from March at $1,500 each, the 4 from April at $1,450 each, and 3 of the 5 from May at $1,600 each. The calculation is as follows: (2*$1,500) + (4*$1,450) + (3*$1,600) = $3,000 + $5,800 + $4,800 = $13,600.

Eaton Electronics Uses a Periodic Inventory System