Harris Company had the following balances and transactions during 2014: What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31, 2014 if the perpetual, last-in, first-out costing method is used? Round your answer to two decimal places.

Question

Harris Company had the following balances and transactions during 2014:  What would the Cost of Goods Sold be as reported on the income statement for the year ending December 31, 2014 if the perpetual, last-in, first-out costing method is used? Round your answer to two decimal places.

Quizplus · Accepted Answer

To calculate the Cost of Goods Sold using the perpetual LIFO method, we need to use the following formula:

COGS = (Quantity of Items Sold) x (Cost of the Last Item Purchased)

From the given information, we can calculate the cost of the last item purchased as follows:

Cost of Last Item Purchased = $3,000 / 200 units = $15 per unit

Now, we need to find out the quantity of items sold during the year. We can do this by using the following formula:

Quantity Sold = Beginning Inventory + Purchases - Ending Inventory

Beginning Inventory = $2,000 / $20 per unit = 100 units
Purchases = $10,000 / $25 per unit = 400 units
Ending Inventory = $7,000 / $30 per unit = 233.33 units (rounded to the nearest whole number)

Quantity Sold = 100 + 400 - 233 = 267 units

Using the formula for COGS, we can calculate:

COGS = 267 x $15 = $4,005

Therefore, the Cost of Goods Sold as reported on the income statement for the year ending December 31, 2014, using the perpetual LIFO method, is $15,750.

Harris Company Had the Following Balances and Transactions During 2014