Metro Computer Company had the following balances and transactions during 2016: $$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 280 \text { units at } \$ 71 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 1120 \text { units at } \$ 78 \
\hline 30 \text { October } & \text { Sold } 100 \text { units } \
\hline
\end{array}$$ What would the company's ending inventory amount be on 31 December 2016 if the perpetual last-in,first-out costing method is used?

Question

Metro Computer Company had the following balances and transactions during 2016: $$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 280 \text { units at } \$ 71 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 1120 \text { units at } \$ 78 \
\hline 30 \text { October } & \text { Sold } 100 \text { units } \
\hline
\end{array}$$ What would the company's ending inventory amount be on 31 December 2016 if the perpetual last-in,first-out costing method is used?

Quizplus · Accepted Answer

The perpetual last-in, first-out (LIFO) costing method assumes that the most recently purchased items are the first to be sold. Therefore, the ending inventory will consist of the oldest items, which were purchased at a cost of $71 per unit. The ending inventory amount is calculated as follows:Ending inventory = Beginning inventory + Purchases - Cost of goods soldBeginning inventory = 280 units x $71 = $19,880Purchases = 1120 units x $78 = $87,360Cost of goods sold = 70 units x $71 + 100 units x $78 = $15,180Ending inventory = $19,880 + $87,360 - $15,180 = $92,060

Metro Computer Company Had the Following Balances and Transactions During