A company’s inventory records report the following in November of the current ye
ID: 2337974 • Letter: A
Question
A company’s inventory records report the following in November of the current year:
On November 8, it sold 13 units for $35 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 13 units sold?
A) $140
B) $87
C) $100
D) $160
E) $105
A company had beginning inventory of 11 units at a cost of $9 each on March 1. On March 2, it purchased 11 units at $16 each. On March 6 it purchased 5 units at $16 each. On March 8, it sold 25 units for $59 each. Using the FIFO perpetual inventory method, what was the cost of the 25 units sold?
A) $355
B) $323
C) $400
D) $275
E) $243
Beginning November 1 4 units @ $5 Purchase November 2 11 units @ $7 Purchase November 12 7 units @ $9Explanation / Answer
Solution 1:
Under LIFO 13 units sold on november 8th will consist of 11 units purchased on Nov 2 and 2 units purchased on nov 1
Therefore Cost of goods sold = (11*$7) + (2*$5) = $87
Hence option B is correct.
Solution 2:
Under FIFO method, 25 units sold on March 8 will consist of 11 units in beginning inventory and 11 units purchased on March 2 and 3 units purhcased on March 6.
Cost of goods sold = (11*$9) + (11*$16) + (3*$16)
= $323
Hence option B is correct.
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