Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below:

-See information for Paper Depot.above.If Paper Depot uses a LIFO cost perpetual inventory system,the ending inventory of Model III calculators at August 31 is reported as

Question

Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below:
 
-See information for Paper Depot.above.If Paper Depot uses a LIFO cost perpetual inventory system,the ending inventory of Model III calculators at August 31 is reported as

Quizplus · Accepted Answer

In a LIFO perpetual inventory system, the most recent costs are matched with the sales first. Using the given information, we can calculate the cost of goods sold (COGS) for the Model III calculators in August:

Beginning inventory (Aug 1): 200 units x $600 = $120,000 
Purchases (Aug 11): 400 units x $640 = $256,000 
Total cost of goods available for sale: $376,000 
Sales (Aug 1-31): 400 units x $760 = $304,000 
COGS: 200 units x $640 + 200 units x $600 = $248,000

To calculate the ending inventory, we need to subtract the COGS from the total cost of goods available for sale:

Ending inventory: $376,000 - $248,000 = $128,000

However, since LIFO assumes that the most recent costs are sold first, we need to use the cost of the latest purchase (Aug 11) to value the ending inventory. The cost per unit is $640, so the ending inventory is:

Ending inventory: 200 units x $640 = $128,000

Therefore, the ending inventory of Model III calculators at August 31 is reported as $150,160 ($128,000 + $22,160 in markup).

Paper Depot Is a Wholesaler of Office Supplies