Question

Use the information below to answer the following question The following units of an inventory item were available for sale during the year: 10 units at $55 25 units at $60 30 units at $65 15 units at $70 Beginning inventory First purchase Second purchase Third purchase The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The value of ending inventory using LIFO is Од. $1,250 Ob. $1,375 Oc. $1,150 Od. $1,350

Answer 1

c. $1,150

Under periodic inventory system, inventory records are updated as at the end of period.
LIFO stands for last in first out.It means inventory which is bought in last is sold first.
Value of ending inventory			=	Cost of goods available for sale - Cost of good sold
			=	$    5,050	-	$       3,900
			=	$    1,150
Working:
				Units	Unit rate	Cost
# 1	Beginning inventory			10	$          55	$           550
	First purchase			25	$          60	$       1,500
	Second purchase			30	$          65	$       1,950
	Third purchase			15	$          70	$       1,050
	Cost of goods available for sale			80		$       5,050
# 2	So units sold be calculated as follows:
	Third purchase			15	$          70	$       1,050
	Second purchase			30	$          65	$       1,950
	First purchase			15	$          60	$           900
	Total			60		$       3,900