Alphabet Company,which uses the periodic inventory method,buys different letters for resale.It buys A through G in January at $4 per letter.It buys H through L at $6 per letter.It buys M through R in March at $7 per letter.It sells A,D,E,H,J and N in April. If the company uses the LIFO method,what is the cost of its ending inventory (rounded to the nearest dollar)?
A)$24
B)$42
C)$58
D)$76

Question

Quizplus · Accepted Answer

COGS(LIFO)= 6 letters @ 7/letter = $42
P = 7 @ $4 + $5 @ $6 + 6 @ $7 = $100
Beg inv + purchases = GAFS-End inv = COGS
0 + $100 = $100 - EI = $42
EI = $58.

Alphabet Company,which Uses the Periodic Inventory Method,buys Different Letters for Resale.It