Question

Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $500.000 (20,000 units at $25 each). During 2021, 80,000 units were purchased, all at the same price of $30 per unit. 85,000 units were sold during 2021. Calculate the December 31, 2021, ending inventory and cost of goods sold for 2021 based on a periodic inventory system. COGS - Periodic LIFO Cost of Goods Available for Sale Cost Cost of Goods # of units per Available unit Ending Inventory - Periodic LIFO Cost # of units in ending Ending per inventory Inventory unit Cost per unit # of units sold Cost of Goods Sold 20.000 Beginning Inventory $ 25 S 500 000 S 25 $ 25 30 $ 30 Purchases $ 30 80 000 100 000 2.400,000 2,900,000 S Total

Answer 1

• AS PER LIFO METHOD UNIT PURCHASED IN LAST WILL BE SOLD FIRST.
• HENCE….TO MAKE SALES OF 85000 UNITS ; AT FIRST 80000 -UNIT PURCHASHED DURING THE YEAR MUST HAVE BEEN USED
• AND FOR THE REMANING 5000 UNITS FROM OPENING UNIT MUST BEEN USED,
• AND THEREFORE , 15000 UNITS IN ENDING INVENTORY MUST BEEN THOSE ARE IN OPENING INVENTORY

• 	Cost of good available for Sales	COGS- LIFO	Ending inventory -LIFO
  	unit	Cost per unit	Cost of good avaiable	unit	Cost per unit	Cost of good sold	unit	Cost per unit	Ending inventory
  	A	B	C= A* B	D	E =B	F = D * E	G = A- D	H = B	I = G * H
  Beginning inventory	20,000	25	$                         500,000	5,000	25	125,000	15,000	25	375,000
  Purchase	80,000	30	$                      2,400,000	80,000	30	2,400,000	-	30	-
  	100,000		$                      2,900,000	85,000		2,525,000	15,000		375,000