Inventory information for Great Falls Merchandising,Inc.is provided below.Sales for the period were 2,800 units for $8 each.The company uses a LIFO periodic inventory system. Determine the ending inventory at March 31.

Question

Inventory information for Great Falls Merchandising,Inc.is provided below.Sales for the period were 2,800 units for $8 each.The company uses a LIFO periodic inventory system.  Determine the ending inventory at March 31.

Quizplus · Accepted Answer

Since the company uses LIFO periodic inventory system, the cost of goods sold will be based on the cost of the most recent purchases. Therefore, the cost of goods sold for 2,800 units will be based on the cost of the 2,800 units purchased most recently. 
Let's assume that during the period, Great Falls Merchandising, Inc. made the following purchases:
- 1,000 units at $6 each
- 3,000 units at $7 each
- 2,500 units at $8 each
- 1,500 units at $9 each

The total cost of goods available for sale will be:
(1,000 x $6) + (3,000 x $7) + (2,500 x $8) + (1,500 x $9) = $65,000

The cost of goods sold will be:
2,800 units x $8 = $22,400

To determine the ending inventory, we need to subtract the cost of goods sold from the total cost of goods available for sale:
$65,000 - $22,400 = $42,600

Therefore, the ending inventory at March 31 is $2,400 (300 units at $8 each).

Inventory Information for Great Falls Merchandising,Inc