Grand Forks Enterprises sells toy airplanes to retailers such as K-Mart and Wal-Mart.Information about inventory is contained in the table below.The company uses a LIFO perpetual inventory system and sells inventory for $5.00 per unit. Determine the cost of goods sold for the January 10^th sale.

Question

Quizplus · Accepted Answer

To determine the cost of goods sold using LIFO perpetual inventory system, we need to use the latest available cost first. In this case, we have the following information about inventory:

- On January 1, there were 1,000 units in inventory at a cost of $2.40 per unit.
- On January 5, 600 units were purchased at a cost of $2.60 per unit.
- On January 10, 400 units were sold.

Since we are using LIFO method, the cost of the latest purchase (January 5) will be used first to calculate the cost of goods sold. Therefore, the cost of goods sold can be calculated as:

Cost of goods sold = 600 units x $2.60 per unit = $1,560

Note that we do not need to consider the cost of the initial inventory as it is already accounted for in previous sales.

Therefore, the correct answer is C) $2,400.

Grand Forks Enterprises Sells Toy Airplanes to Retailers Such as K-Mart