Question

ABC company has the following inventory information. What amount is the ending inventory if LIFO is used? Quantity Price 1-Jun Beginning Inventory 20 2 8-Jun Purchase 15 3 14-Jun Sale 25 7 20-Jun Purchase 20 4 Select one: O a. 50 O b. 90 O c. 70 O d. 55

Answer 1

As per the LIFO method, the goods last purchased/most recently purchased should be sold first.The ending inventory consists of the older purchases or the beginning inventory.

Under LIFO,

Number of units in ending inventory:

1st june	20 units
8th june	+15
14th june	-25
20 june	+20
Ending stock units=	30

These 30 units of ending inventory is the beginning inventory and early purchases

Beginning inventory	20 units @$2	$40
8 june-purchases	10 units@$3	$30
Cost of ending inventory		$70

Thus,option c) $70 is the correct option.