Perch Company reported the following purchases and sales for its only product. Perch uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.

Question

Quizplus · Accepted Answer

Using LIFO, we assume that the last units purchased are the first to be sold. Therefore, we start assigning costs of goods sold with the most recent purchases and work our way back.

Calculation for cost of goods sold using LIFO:

8 units from the 1/10 purchase at $120 = $960 
5 units from the 2/2 purchase at $140 = $700 
3 units from the 4/1 purchase at $160 = $480

Total = $960 + $700 + $480 = $2,140

Therefore, the cost assigned to cost of goods sold using LIFO is $2,140, which is closest to option D ($3,580).

Perch Company Reported the Following Purchases and Sales for Its