Question

Required information A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 450 units. Ending inventory at January 31 totals 350 units. Beginning inventory on January 1 Purchase on January 9 Purchase on January 25 Units 400 200 200 Unit Cost $ 4.00 5.00 2.50 Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on LIFO. Perpetual LIFO: Goods purchased Inventory Balance Date Cost of Goods Sold Cost per Cost of Goods unit S old Cost per unit # of units # of units of units Cost per unit Inventory Balance January 1 January 9 January 25 January 26 Totals

Answer 1

Ans.	Perpetual LIFO:
		Goods Purchased	Cost of goods sold	Inventory Balance
	Date	# of Units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of Units	Cost per unit	Inventory Balance
	01-Jan	400	$4.00				400	$4.00	$1,600
	09-Jan	200	$5.00				400	$4.00	$1,600
							200	$5.00	$1,000
	25-Jan	200	$2.50				400	$4.00	$1,600
							200	$5.00	$1,000
							200	$2.50	$500
	26-Jan			200	$2.50	$500
				200	$5.00	$1,000
				50	$4.00	$200	350	$4.00	$1,400
	Total			Cost of goods sold	$1,700	Ending inventory	$1,400
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.