The following scenario will be used for the next three questions Thorin Corp. be

Question

The following scenario will be used for the next three questions Thorin Corp. began operations in 2017. It is a merchandiser of a single item - Product Q and uses the Periodic Inventory method. The following relates to purchases of Product Q during 2017: Date Units 400 300 600 300 300 100 2,000 Cost Per Unit $12 $20 $24 $28 $32 $36 Total Cost $4,800 $6,000 $14,400 $8,400 $9,600 $3,600 $46,8000 1/02/17 1/1417 6/25/17 10/16/17 12/16/17 Goods available for sale At 12/31/17, a physical inventory indicted 420 units of Product Q on hand.

Explanation / Answer

Solution:

If LIFO method is used then ending inventory of 420 units will consist of 400 units purchased on 02.01.2017 and 20 units from purchase on 16.01.2017.

Ending inventory under LIFO = (400*$12) + (20*$20) = $5,040

Hence first option is correct.

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