Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2013 with the following inventory layers (listed in chronological order of acquisition): During 2013, 20,000 units were purchased for $15 per unit. Sales for the year totaled 30,000 units at various prices, leaving 3,000 units in ending inventory.
Required:
1. Calculate cost of goods sold for 2013.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2013 financial statements, assuming the amount is material. Assume an income tax rate of 40%.

Question

Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2013 with the following inventory layers (listed in chronological order of acquisition):  During 2013, 20,000 units were purchased for $15 per unit. Sales for the year totaled 30,000 units at various prices, leaving 3,000 units in ending inventory.
Required:
1. Calculate cost of goods sold for 2013.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2013 financial statements, assuming the amount is material. Assume an income tax rate of 40%.

Quizplus · Accepted Answer

The Answer of Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2013 with the following inventory layers (listed in chronological order of acquisition):  During 2013, 20,000 units were purchased for $15 per unit. Sales for the year totaled 30,000 units at various prices, leaving 3,000 units in ending inventory.
Required:
1. Calculate cost of goods sold for 2013.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2013 financial statements, assuming the amount is material. Assume an income tax rate of 40%.

Bettencourt Clothing Corporation Uses a Periodic Inventory System and the LIFO