Perpetual Inventory Using LIFO The following units of a particular item were ava

Question

Perpetual Inventory Using LIFO The following units of a particular item were available for sale during the calendar year Jan. 1 Apr. 19 June 30 Sept. 2 Nov. 15 The firm maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the last-in, first-out method. Present the data in the form illustrated in Exhibit 4. Under LIFOo, if units are in inventory at two or more different costs, enter the units with the LOWER unit cost first in the Inventory Unit Cost column. Inventory Sale Purchase Sale Purchase 4,000 units at $20 2,500 units 6,000 units at $24 4,500 units 1,000 units at $25

Explanation / Answer

Note:

Under LIFO method when an inventory is issued to the production department than the inventory which has been purchased last should be go into the production.As the name suggest last in first out. (LIFO)

Schedule of cost of merchandise Sold LIFO method Purchases Cost of merchandise sold Inventory Date Quantity Unit Cost ($) Total Cost ($) Quantity Unit Cost ($) Total Cost ($) Quantity Unit Cost ($) Total Cost ($) 1-Jan 4000 20 80000 19-Apr 2500 20 50000 1500 20 30000 30-Jun 6000 24 144000 1500 20 30000 6000 24 144000 2-Sep 4500 24 108000 1500 20 30000 1500 24 36000 15-Nov 1000 25 25000 1500 20 30000 1500 24 36000 1000 25 25000 31-Dec Balance 158000 441000

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