Question

A company had the following purchases and sales during its first year of operations: 

January: 11 units at $125 7 units February: 21 units at $130 4 units May September: 13 units at $148 7 units November: 11 units at $145 15 units 16 units at $135 8 units 

On December 31, there were 31 units remaining in ending inventory. Using the Perpetual LIFO inventory valuation method, what is the cost of the ending Assume all sales were made on the last day of the month.) 

Answer 1

Correct answer = 4070

When we follow Perpectual LIFO, inventory balances are updated each time we sell the inventory. We can show the following work sheet for computing the inventory value on Dec 31st.

	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
Jan	11	125	1375	7	125	875	4	125	500
Feb	21	130	2730	4	130	520	4	125	500
							17	130	2210
May	16	135	2160	8	135	1080	4	125	500
							17	130	2210
							8	135	1080
Sep	13	140	1820	7	140	980	4	125	500
							17	130	2210
							8	135	1080
							6	140	840
Nov	11	145	1595	11	145	1595	4	125	500
				4	140	560	17	130	2210
							8	135	1080
							2	140	280
									4070

Thus the final inventory value = 4070