Charter Company,which uses the perpetual inventory method,purchases different letters for resale.Character had a beginning inventory comprised of seven units at $4 per unit.The company purchased five units at $6 per unit in February,sold seven units in October,and purchased two units at $7 per unit in December. If Charter Company uses the LIFO method,what is the cost of goods sold for the year?

Question

Quizplus · Accepted Answer

Using the LIFO (last-in, first-out) method, the cost of goods sold is calculated by assuming that the most recent purchases are sold first. 
Thus, the company sold:
- 2 units from the December purchase at $7 per unit (the latest purchase)
- 5 units from the February purchase at $6 per unit (the next most recent purchase)
- 7 units from the beginning inventory at $4 per unit (the oldest purchase)

The cost of goods sold can be calculated as follows:
2 units x $7 = $14
5 units x $6 = $30
7 units x $4 = $28
Total cost of goods sold = $14 + $30 + $28 = $72

Therefore, the correct answer is A) $38, which is not one of the answer choices. This means there may be an error in the question or answer options.

Charter Company,which Uses the Perpetual Inventory Method,purchases Different Letters for Resale.Character