A company had the following purchases during the current year:
On December 31, there were 26 units remaining in ending inventory. Using the LIFO inventory valuation method, what is the cost of the ending inventory?
$3,280.
$3,200.
$3,445.
$3,540.
$3,640.
Solution
In LIFO Valuation method, most recent stock are cleared for sale or consumption and the ending inventory will consist of first purchases.
So LIFO stock of 26 units will consist of
10 units of January and 16 units of February
Cost of ending inventory = 10 * 120 + 16 * 125 = 1200 + 2000 = $3200
Hence the correct answer is B
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A company had the following purchases during the current year- On Dec.docx
1. A company had the following purchases during the current year:
On December 31, there were 26 units remaining in ending inventory. Using the LIFO inventory
valuation method, what is the cost of the ending inventory?
$3,280.
$3,200.
$3,445.
$3,540.
$3,640.
January: 10 units at $120
February: 20 units at $125
May: 15 units at $130
September: 12 units at $135
November: 10 units at $140
Solution
In LIFO Valuation method, most recent stock are cleared for sale or consumption and the ending
inventory will consist of first purchases.
So LIFO stock of 26 units will consist of
10 units of January and 16 units of February
Cost of ending inventory = 10 * 120 + 16 * 125 = 1200 + 2000 = $3200
Hence the correct answer is B
