The inventory record for a particular item for Year 2 appears below.
$\begin{array}{|l|l|l|l|}
\hline \text { Inventory, January 1, Year 2 } & 20,000 & \$ 0.20 & \$ 4,000 \
\hline \text { Purchases: } & & & \
\hline \text { March 2 } & 4,000 & .24 & \$ 960 \
\hline \text { April 30 } & 3,000 & .28 & 840 \
\hline \text { June 15 } & 6,000 & .32 & 1,920 \
\hline \text { September 30 } & 2,000 & .26 & 520 \
\hline \text { December } 15 & 1.000 & .20 & 200 \
\hline \text { Total purchases } & 16.000 & & \$ 4,440 \
\hline \text { Total available for sale } & 36,000 & & \$ 8,440 \
\hline \text { Units sold } & 28,000 & & \
\hline
\end{array}$ Refer to the Inventory Record example.The cost of goods sold for year 2 under LIFO is:

Question

Quizplus · Accepted Answer

Under the Last-In, First-Out (LIFO) method, the cost of goods sold is calculated by starting with the most recent purchases and working backwards until the total number of units sold is accounted for. The calculation for Year 2 would be as follows:- December 15 purchase: 1,000 units at $0.20 = $200- September 30 purchase: 2,000 units at $0.26 = $520- June 15 purchase: 6,000 units at $0.32 = $1,920- April 30 purchase: 3,000 units at $0.28 = $840- March 2 purchase: 4,000 units at $0.24 = $960- From January 1 inventory: 12,000 units (28,000 total units sold - 16,000 units from purchases in Year 2) at $0.20 = $2,400Adding these amounts gives the cost of goods sold under LIFO:$200 + $520 + $1,920 + $840 + $960 + $2,400 = $6,840.

The Inventory Record for a Particular Item for Year 2