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Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each.During the period,the company purchased inventory items as follows
Glasgow sold 220 units after purchase 3 for $17.00 each.

-Glasgow's ending inventory under LIFO would be:
A)$2,730.
B)$2,460.
C)$2,220.
D)$1,950.

Question

Use the following information for questions
Glasgow Enterprises started the period with 80 units in beginning inventory that cost $7.50 each.During the period,the company purchased inventory items as follows
Glasgow sold 220 units after purchase 3 for $17.00 each.
 
-Glasgow's ending inventory under LIFO would be:
A)$2,730. 
B)$2,460. 
C)$2,220. 
D)$1,950.

Quizplus · Accepted Answer

Using LIFO method, we assume that the last goods purchased are the first goods sold. Therefore, we will first use the units purchased in June 15th and then on June 30th. 
Units sold = 220 
Units purchased on June 30th = 160 @ $9.00 each 
Units purchased on June 15th = 100 @ $8.00 each and 20 @ $7.50 each (remaining from beginning inventory) 
Cost of goods sold = (160 x $9.00) + (60 x $8.00) + (20 x $7.50) = $1,620 + $480 + $150 = $2,250
Ending inventory = (20 x $7.50) = $150 
Therefore, the ending inventory under LIFO would be $2,220.

Use the Following Information for Questions