The Divine Merchandising Corporation began March operations with merchandise inv

Question

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 Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and 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.

$162

$1,486

$284

$1,324

$320

$162

$1,486

$284

$1,324

$320

Explanation / Answer

Calculation of Cost of Goods Sold Under LIFO Date Particulars Qty Rate $ Amount $ 01-Mar Opening Inventory 6 27 162 04-Mar Purchases 12 28 336 06-Mar Sales -11 28 -308 Cost of Goods Sold 15-Mar Purchases 18 30 540 20-Mar Sales -17 30 -510 Cost of Goods Sold 26-Mar Purchases 14 32 448 28-Mar Sales -12 32 -384 Cost of Goods Sold Total Cost of Goods Sold under LIFO = 1202 Since $ 1,324 is closest to this value, hence the Cost of Goods Sold will be $ 1,324.

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