Question

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

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	150 units @ $10.00
5	Purchase	220 units @ $12.00
10	Sales		140 units @ $20.00
15	Purchase	100 units @ $13.00
24	Sales		90 units @ $21.00

Multiple Choice

• $2,590

• $2,980

• $2,460

• $2,860

• $2,850

Answer 1

Solution:

Computation of Cost of Goods sold under LIFO method
Date	Purchase			Cost of Goods Sold			Inventory Balance
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-May							150	$10.00	$1,500
5-May	220	$12.00	$2,640				150	$10.00	$1,500
							220	$12.00	$2,640
10-May				140	$12.00	$1,680	150	$10.00	$1,500
							80	$12.00	$960
15-May	100	$13.00	$1,300				150	$10.00	$1,500
							80	$12.00	$960
							100	$13.00	$1,300
24-May				90	$13.00	$1,170	150	$10.00	$1,500
							80	$12.00	$960
							10	$13.00	$130
Total				230		$2,850	240		$2,590

Hence cost of goods sold using LIFO = $2,850

Hence, last option is correct.