Roadside Company had the following balances and transactions during 2018: $$\begin{array} { | l | l | }
\hline \text { Beginning Merchandise Inventory } & 30 \text { units at } \$ 74 \
\hline \text { March 10 } & \text { Sold } 28 \text { units } \
\hline \text { June 10 } & \text { Purchased } 60 \text { units at } \$ 84 \
\hline \text { October 30 } & \text { Sold 54 units } \
\hline
\end{array}$$ What is the amount of the company's ending Merchandise Inventory,as disclosed in the December 31,2018 balance sheet,using the periodic LIFO inventory costing method?

Question

Roadside Company had the following balances and transactions during 2018: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory } & 30 \text { units at } \$ 74 \
\hline \text { March 10 } & \text { Sold } 28 \text { units } \
\hline \text { June 10 } & \text { Purchased } 60 \text { units at } \$ 84 \
\hline \text { October 30 } & \text { Sold 54 units } \
\hline
\end{array}$$ What is the amount of the company's ending Merchandise Inventory,as disclosed in the December 31,2018 balance sheet,using the periodic LIFO inventory costing method?

Quizplus · Accepted Answer

Under the periodic LIFO (Last In, First Out) method, the last items purchased are the first ones to be sold. Roadside Company starts with 30 units at $74 each. They then purchase 60 units at $84 each. By the end of the year, they have sold a total of 28 + 54 = 82 units.Since sales are made from the most recent purchases under LIFO, all 60 units purchased in June at $84 each would be sold first, followed by 22 units (82 total sold - 60 from June purchase) from the beginning inventory of 30 units at $74 each. This leaves 8 units (30 beginning units - 22 sold from beginning inventory) from the beginning inventory at the end of the year.The ending inventory would therefore consist of these 8 units at $74 each, totaling $592 (8 units * $74/unit).

Roadside Company Had the Following Balances and Transactions During 2018