Metro Computer Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 280 \text { units at } \$ 71 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 1120 \text { units at } \$ 78 \
\hline 30 \text { October } & \text { Sold } 100 \text { units } \
\hline
\end{array}$$
What would the company's ending inventory amount be on 31 December 2016 if the perpetual last-in,first-out costing method is used?

Question

Metro Computer Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 280 \text { units at } \$ 71 \
\hline 10 \text { March } & \text { Sold } 70 \text { units } \
\hline 10 \text { June } & \text { Purchased } 1120 \text { units at } \$ 78 \
\hline 30 \text { October } & \text { Sold } 100 \text { units } \
\hline
\end{array}$$
What would the company's ending inventory amount be on 31 December 2016 if the perpetual last-in,first-out costing method is used?

Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first to be sold. After the sales, the ending inventory consists of 280 units from the beginning inventory and 950 units from the June purchase. The ending inventory is calculated as (280 units x $71) + (950 units x $78) = $94,470.

Metro Computer Company Had the Following Balances and Transactions During