A company acquired 100 units of inventory on January 1,2010 and 100 units on December 1,2010.The company sold 100 units on December 31,2010,which was the company's only sale.Under LIFO,the cost of goods sold would come from ________.
A)the purchase cost on January 1,2010
B)the purchase cost on December 1,2010
C)an average of the cost over the two purchase dates
D)none of the above

Question

Quizplus · Accepted Answer

Under LIFO (Last-In, First-Out) method, the cost of goods sold would come from the most recently acquired inventory. In this case, the company sold 100 units on December 31,2010, which means the inventory sold would be from the most recent purchase made on December 1, 2010, making B the correct choice. Purchases made earlier in the year would be assumed to still be in stock.

A Company Acquired 100 Units of Inventory on January 1,2010