Use this inventory information for the month of March to answer the following questions. $\begin{array}{rlll}
\text { Mar. } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$
Assuming that a perpetual inventory system is used,what is ending inventory on a LIFO basis?

Question

Use this inventory information for the month of March to answer the following questions. $\begin{array}{rlll}
\text { Mar. } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$
 Assuming that a perpetual inventory system is used,what is ending inventory on a LIFO basis?

Quizplus · Accepted Answer

LIFO (last in, first out) assumes that the most recent inventory purchased is sold first, and so the ending inventory consists of the oldest inventory on hand. Therefore, ending inventory on a LIFO basis can be calculated by adding the quantity and cost of the 20 units from March 1st ($1,360) and the 10 units from March 20th ($720), and subtracting them from the quantity and cost of the total inventory purchased during the month ($4,800). This gives us an ending inventory of $2,720.

Use This Inventory Information for the Month of March to Answer