Cornerstone Exercise 6-23 (Algorithmic) Inventory Costing: LIFO Bordeaux Company

Question

Cornerstone Exercise 6-23 (Algorithmic) Inventory Costing: LIFO Bordeaux Company has the following information related to purchases and sales of one of its inventory items: Units Purchased at Cost 150 units $5 $750 200 units @ $12-$2,400 Date Description Units Sold at Retail June 1 Beginning Inventory 9 Purchase 1 14 Sale 1 22 Purchase 2 29 Sale2 300 units @ $25 250 units@$14$3,500 225 units @$25 Assume that Bordeaux Company uses a perpetual inventory system Required: Calculate the cost of goods sold and the cost of ending inventory using the LIFO inventory costing method Cost of goods sold Cost of ending inventory

Explanation / Answer

Cost of goods sold = $ 2,900 + $3150 = $6,050 Cost of Ending inventory = $600 Working Note: Statement of perpetual inventory system using the LIFO inventory system: Date Particulars Purchase Sale Balance Unit Unit Cost Total Unit Unit Cost Total Unit Unit Cost Total Jun.1 Beginning balance            150 5            750            150 5            750 Total            150 5            750 Jun.9 Purchase            200 12         2,400            150 5            750            200 12         2,400 Total            350         3,150 Jun.14 Sale 200 12         2,400 100 5            500 Total 300         2,900               50 5            250 Jun.22 Purchase            250 14         3,500               50 5            250            250 14         3,500 Total            300         3,750 Jun.29 Sale 225 14         3,150               50 5            250               25 14            350 Total 225         3,150               75            600

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