Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO.
 

Date	Activities	Units Acquired at Cost	Units Sold at Retail
May 1	Beginning Inventory	310 units @ $16
5	Purchase	300 units @ $18
10	Sales		220 units @ $26
15	Purchase	180 units @ $19
24	Sales		170 units @ $27

Answer 1

In periodic inventory LIFO, the cost of goods sold and ending inventory is calculated at the end of the accounting period.

 

Total units available for sale = 310 + 300 + 180 = 790 units

 

Total units sold = 220 + 170 = 390 units

 

Ending inventory = Total units available for sale - Total units sold

= 790 – 390

= 400 units

 

Under the LIFO, latest units acquired become the cost of goods sold and oldest units will remain in inventory and reported as the cost assigned to ending inventory.

Date	Units	Rate	Total cost
May 1	310	$16	$4,960
May 5	90	$18	$1,620
Total	400		$6,580

∴ Cost assigned to ending inventory using LIFO = $6,580

Answer 2

Date	Units	Rate	Total cost
May 1	310	$           16	$               4,960
May 5	90	$           18	$               1,620
Total	400		$               6,580