13. The Divine Merchandising Corporation began March operations with merchandise

ID: 2383729 • Letter: 1

Question

13. The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the LIFO perpetual inventory method, determine the cost of goods available for sale during March.

A) $162
B) $1,486
C) $284
D) $1,324
E) $320

Explanation / Answer

Date

Beginning Inventory

6 @ $27

$162

March 4

12 @ $28

$336

March 15

18 @ $30

$540

March 26

14 @ $32

$448

Total

$1486

Answer: B, $1486

(Cost of goods available for sale = beginning inventory + purchases)