Question

Beginning inventory, purchases, and sales for Product XCX are as follows:

Sep. 1	Beginning Inventory	22 units	@	$11
5	Sale	15 units
17	Purchase	27 units	@	$13
30	Sale	15 units

Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

a) Cost of goods sold	$
b) Inventory, September 30	$

Answer 1

Answer

• Method to be followed = LIFO – Perpetual.

This means that Cost of Goods Sold is to be calculated at the time of sale from latest purchase price.

• Working

Cost of Goods available for sale = (22 units x $11) + (27 units x $ 13)
= 242 + 351
= $ 593

• Answer

[a] Cost of Goods Sold = (15 units x $ 11) + (15 units x $ 13)
= 165 + 195
= $ 360 = Answer

[b] Inventory Sept 30 = Cost of goods available for sale – Cost of Goods Sold
= $ 593 - $ 360
= $ 233 = Answer