Turk\'s Toy Trains began 2008 with 1200 toy trains, which cost $9.00 each in its

Question

Turk's Toy Trains began 2008 with 1200 toy trains, which cost $9.00 each in its inventory. During the year it made the following inventory purchase of inventory.

Date Units Purchased Cost per Unit Total Cost
3/18 500 $9.50 $4,750
6/4 700 $10.00 $7,000
8/28 400 $10.50 $4,200
11/13 900 $11.50 $10,350
Total 2500 - $26,300

A year end count of ending inventory found that 800 units remained in the company's warehouse on December 31, 2008.

What was the company's cost of goods sold under a LIFO periodic inventory costing system? Please explain solution in detail.

Explanation / Answer

What was the company's cost of goods sold under a LIFO periodic inventory costing system? Please explain solution in detail. LIFO : means LAST IN - FIRST OUT , means that the units that were delivered to the customers started from the last bought inventory and backwards. This means that the units bought on 11/13 were the first shipped to customers, then the ones on 8/28 and so on. At the end there is 800 units left. Because we started with 1200 at 9.00 dollars, there is 800 of those 1200 left and 400 were sold along with the units bought later. So it asks what was the cost the company had on the goods that were sold. This would be $26,300 (total from later buys) + $3,600 (400 units * $9.00 , so we leave 800 not being sold) = $29,900

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