Jameson Company had the following balances and transactions during 2019: $$\begin{array} { | l | l | }
\hline\text { Beginning Merchandise Inventory as of January 1, } & \
2019 & 320 \text { units at } \$ 74 \
\hline \text { March 10 } & \text { Sold } 80 \text { units } \
\hline & \text { Purchased } 150 \text { units at } \
\text { June 10 } & \$ 77 \
\hline \text { October 30 } & \text { Sold 150 units } \
\hline
\end{array}$$ What would be reported for Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

Question

Jameson Company had the following balances and transactions during 2019: $$\begin{array} { | l | l | } 
\hline\text { Beginning Merchandise Inventory as of January 1, } & \
2019 & 320 \text { units at } \$ 74 \
\hline \text { March 10 } & \text { Sold } 80 \text { units } \
\hline & \text { Purchased } 150 \text { units at } \
 \text { June 10 } & \$ 77 \
\hline \text { October 30 } & \text { Sold 150 units } \
\hline 
\end{array}$$ What would be reported for Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

Quizplus · Accepted Answer

Under the perpetual inventory system and using the LIFO (Last-In, First-Out) method, the cost of goods sold (COGS) is calculated based on the most recent purchases. The company sold a total of 230 units (80 units + 150 units) during the year. For the first sale of 80 units, since there were no purchases before this sale, all 80 units would come from the beginning inventory at $74 each, totaling $5,920 (80 units * $74).For the second sale of 150 units, these would be taken from the most recent purchase before the sale, which was 150 units at $77 each, totaling $11,550 (150 units * $77).Adding these two amounts together gives the total COGS for the year: $5,920 + $11,550 = $17,470.

Jameson Company Had the Following Balances and Transactions During 2019