Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers:

$$\begin{array}{ll}
\begin{array} { ll }
\text { Date } & \text { Transaction } \
1 / 1 & \text { Beginning Inventory } \
5 / 5 & \text { Purchase } \
8 / 10 & \text { Purchase } \
10 / 15 & \text { Purchase }
\end{array}
\begin{array} { l l}
\text { Number of Units } & \text { Cost per Unit } \
100& \$ 800 \
200 & \$ 900 \
300 & \$ 1,000 \
200 & \$ 1,050
\end{array}
\end{array}$$
During the year,750 laptop computers were sold. What was ending inventory using the LIFO cost flow assumption?
A)$40,000
B)$52,500
C)$60,000
D)$55,000

Question

Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers:

$$\begin{array}{ll}
\begin{array} { ll } 
\text { Date } & \text { Transaction } \
1 / 1 & \text { Beginning Inventory } \
5 / 5 & \text { Purchase } \
8 / 10 & \text { Purchase } \
10 / 15 & \text { Purchase }
\end{array}
\begin{array} { l l} 
\text { Number of Units } & \text { Cost per Unit } \
100& \$ 800 \
200 & \$ 900 \
300 & \$ 1,000 \
200 & \$ 1,050
\end{array}
\end{array}$$
 During the year,750 laptop computers were sold. What was ending inventory using the LIFO cost flow assumption?
A)$40,000
B)$52,500
C)$60,000
D)$55,000

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) assumes that the most recently purchased items are the first to be sold. Therefore, the ending inventory will consist of the earliest purchases. In this case, the ending inventory will consist of the 100 units purchased on 1/1 and 200 units purchased on 5/5, for a total of 300 units. The cost of these units is $800 and $900, respectively, for a total ending inventory value of $40,000 (300 units x $800 + 200 units x $900).

Lauer Corporation Uses the Periodic Inventory System and Has Provided