A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold a total of 150 units for $45 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, calculate the amount of ending inventory on December 31. (Assume that the company uses a perpetual inventory system.)

Question

Quizplus · Accepted Answer

Using the LIFO method, the most recent purchases are sold first. Therefore, the cost of goods sold would be calculated as (100 units x $30) + (50 units x $20) = $3,000 + $1,000 = $4,000. The ending inventory would be the remaining 50 units purchased at $20 each, which equals $1,000.

A Company Purchased 100 Units for $20 Each on January