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 ending inventory for the period.

Question

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 ending inventory for the period.

Quizplus · Accepted Answer

Using the LIFO perpetual inventory system, we assume that the most recently purchased items are the first ones to be sold. Therefore, the cost of goods sold would be calculated as follows:

Cost of goods sold = (150 units x $4.00) + (75 units x $4.50) + (25 units x $4.75)
Cost of goods sold = $600 + $337.50 + $118.75
Cost of goods sold = $1,056.25

To find the ending inventory, we need to add up the cost of the units that were not sold. Using LIFO, the most recent purchases are considered to be the ending inventory. Therefore, the ending inventory would be:

Ending inventory = (50 units x $4.75) + (100 units x $4.50) + (25 units x $4.00)
Ending inventory = $237.50 + $450 + $100
Ending inventory = $787.50

Finally, we can calculate the value of the ending inventory by multiplying the number of units by the selling price per unit:

Ending inventory value = 157.5 units x $5.00 per unit
Ending inventory value = $787.50

Therefore, the ending inventory for the period is $787.50 or choice C.

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