Question

Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with $70,300 in inventory of its only product. The beginning inventory consisted of the following layers: 4, 100 units at $7 per unit 5, 200 units at $8 per unit $28, 700 41, 600 $70, 300 Total During 2018, 6,100 units were purchased at $9 per unit and during 2019, 7,200 units were purchased at $10 per unit. Sales, in units, were 7,200 and 12,400 during 2018 and 2019, respectively. Required: 1. Calculate cost of goods sold for 2018 and 2019. 2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2018 and 2019. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate cost of goods sold for 2018 and 2019. Cost of goods sold: 2018 2019 < Required 1 Required 2 >

Answer 1

Answer:

(A). Cost of goods sold-

2018

= (6100 units × $9) + (7200-6100 units × $8)

= $54900 + $8800 = $63,700

2019-

=(7200 units × $10) + (4100 units * $8) + (1100 units * $7)

= $72000 + $32,800 + $7700 = $112,500

(B) LIFO liquidation profits-

2018- 1100 units * $1 ($9 - $8) = $1100

2019 - (4100 units * $2) + (1100 units * $3)

= $8,200 + $3,300 = $11,500