Rally Wheels Company had the following balances and transactions during? 2018: B
ID: 2508369 • Letter: R
Question
Rally Wheels Company had the following balances and transactions during? 2018:
Beginning Merchandise Inventory as of January? 1, 2018
320 units at $75
March 10
Sold 80 units
June 10
Purchased 1,280 units at$79
October 30
Sold 125 units
What would the? company's ending merchandise inventory cost be on December? 31, 2018 if the perpetual inventory system and the last??in, first?out inventory costing method are? used?
A.
$125,120
B.
$15,875
C.
$101,120
D.
$109,245
Beginning Merchandise Inventory as of January? 1, 2018
320 units at $75
March 10
Sold 80 units
June 10
Purchased 1,280 units at$79
October 30
Sold 125 units
Explanation / Answer
Under LIFO method, latest Inventory purchased is issued first to sales and closing inventory is from units remaining after issue of inventory
80 units sold on March 10 will be issued from Beginning Merchandise Inventory as of January? 1, 2018
So, remaining Inventory out of Beginning Merchandise Inventory as of January? 1, 2018
= (320 – 80) x $75
= $ 18,000 --------------- (1)
125 units sold on October 30 will be issued from June 10 purchases
So, remaining Inventory
= (1,280 – 125) x $79
= $ 91,245 ----------------(2)
So, Value of closing Inventory
= (1) + (2)
= $ 18,000 + $ 91,245
= $109,245
So, as per above calculations, option D is the correct option
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