8. Sylvia\'s Designs Co. had the following inventory activity during April: Unit
ID: 2560394 • Letter: 8
Question
8. Sylvia's Designs Co. had the following inventory activity during April:
Units
Unit
Cost
Beginning inventory
100
$10
Purchase (April 3)
40
12
Sale (April 10)
80
Purchase (April 18)
40
14
Purchase (April 23)
60
15
Sale (April 28)
90
Assuming Sylvia's uses a perpetual LIFO cost flow assumption, ending inventory for April would be
a.
$ 850
b.
$2,560
c.
$ 740
d.
$2,310
Units
Unit
Cost
Beginning inventory
100
$10
Purchase (April 3)
40
12
Sale (April 10)
80
Purchase (April 18)
40
14
Purchase (April 23)
60
15
Sale (April 28)
90
Explanation / Answer
As on April 10:ending inventory=(60 units@$10)=$600
As on April 28;ending inventory=(60 units@$10)+(10 units@$14)=$740(C)
As per LIFO (last in first out);sale as on April 10 would consist of 40 units of April3 and the balance (80-40)=40 units of Beginning inventory.Hence ending invenory as on April 10=60 units of beginning inventory.Sale on April 28 would consist of 60 units of April 23 and the balance (90-60)=30 units of April 18.
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