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

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Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. Therefore, 100 units from February at $30 each and 50 units from January at $20 each are sold. The cost of goods sold is (100 units x $30) + (50 units x $20) = $3,000 + $1,000 = $4,000.

A Company Purchased 100 Units for $20 Each on January