A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the periodic LIFO inventory costing method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670.
B)$5,400.
C)$5,470.
D)$3,200.
E)$5,130.

Question

A company had the following purchases and sales during its first year of operations:  On December 31,there were 26 units remaining in ending inventory.Using the periodic LIFO inventory costing method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670. 
B)$5,400. 
C)$5,470. 
D)$3,200. 
E)$5,130.

Quizplus · Accepted Answer

To calculate cost of goods sold using the periodic LIFO method, we assume that the last units purchased are the first ones sold. So, we start by calculating the cost of the units in ending inventory and then work backward to calculate the cost of goods sold.

The cost of the 26 units remaining in ending inventory is:
2 units at $80 = $160
6 units at $85 = $510
18 units at $90 = $1,620
Total cost of ending inventory = $2,290

Now, we work backward to calculate the cost of goods sold. We start with the units sold on the last day of the month:
15 units at $90 = $1,350
Then, we move to the next purchase:
8 units at $85 = $680
And finally, we use the remaining 3 units from the first purchase:
3 units at $80 = $240
Total cost of goods sold = $2,270

Therefore, the correct answer is (C) $5,470.

A Company Had the Following Purchases and Sales During Its