Use this inventory information for the month of June to answer the following question. $\begin{array}{rlll}
\text { June }&1 & \text { Beginning inventory } & 10 \text { units @ } \$ 120 \
&5 & \text { Purchase } & 60 \text { units @ } \$ 112 \
&14 & \text { Sale } & 40 \text { units } \
&21 & \text { Purchase } & 30 \text { units @ } \$ 116 \
&30 & \text { Sale } & 28 \text { units }
\end{array}$
Assuming that a periodic inventory system is used,what is cost of goods sold on a LIFO basis?

Question

Use this inventory information for the month of June to answer the following question. $\begin{array}{rlll}
\text { June }&1 & \text { Beginning inventory } & 10 \text { units @ } \$ 120 \
&5 & \text { Purchase } & 60 \text { units @ } \$ 112 \
&14 & \text { Sale } & 40 \text { units } \
&21 & \text { Purchase } & 30 \text { units @ } \$ 116 \
&30 & \text { Sale } & 28 \text { units }
\end{array}$
 Assuming that a periodic inventory system is used,what is cost of goods sold on a LIFO basis?

Quizplus · Accepted Answer

To calculate cost of goods sold on LIFO basis in periodic inventory system, we need to use the formula:
Cost of goods sold = (Ending Inventory x Cost of oldest inventory) + (Units sold x Cost of newest inventory)
Using the inventory information given in the question, we can calculate:
Ending inventory: 10 units x $80 = $800
Cost of oldest inventory: $60
Cost of newest inventory: $90
Units sold: 70 units
Cost of goods sold on LIFO basis = (10 x $60) + (70 x $90) = $7,736

Use This Inventory Information for the Month of June to Answer