The following information relates to inventory for Shoeless Joe Inc. At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

Question

The following information relates to inventory for Shoeless Joe Inc.  At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

Quizplus · Accepted Answer

Shoeless Joe Inc. would report gross profit using LIFO cost flow assumptions as (Total Sales - Cost of Goods Sold). Using LIFO cost flow assumptions, cost of goods sold would be based on the most recent inventory costs, which in this case would be $95 for the sale of the 15 units on December 17 and $80 for the sale of the 10 units on December 22. This gives a total cost of goods sold of $175 ($95 + $80). Therefore, gross profit would be calculated as $255 (total sales of $430 - cost of goods sold of $175).

The Following Information Relates to Inventory for Shoeless Joe Inc