A firm that uses a period system sells a single product that had a beginning inventory of 9,000 units with a total cost of $45,000. Early in the year, 15,000 units were purchased at $6 each. At the end of the year there were 4,000 units on hand. Using LIFO, what is the value of the ending inventory of 4,000 units?

Question

Quizplus · Accepted Answer

Under LIFO (Last In, First Out), the most recent purchases are sold first. The ending inventory consists of the oldest units. Here, the ending inventory of 4,000 units would come from the beginning inventory of 9,000 units. The cost of the beginning inventory is $45,000 for 9,000 units, so each unit costs $45,000 / 9,000 = $5. Therefore, the value of the ending inventory (4,000 units) is 4,000 units * $5/unit = $20,000.

A Firm That Uses a Period System Sells a Single