Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 360 units that cost $65 each. During the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. Chess Top also sold 900 units during the month. Using the LIFO method, what is the amount of cost of goods sold for the month?
A) $60,786.
B) $58,500.
C) $61,470.
D) $60,120.

Question

Quizplus · Accepted Answer

Using LIFO method, the most recent (last) inventory purchases are assumed to be sold first. Therefore, the cost of goods sold will be calculated as follows:
900 units sold at $70 = $63,000
270 units sold at $68 = $18,360
Total cost of goods sold = $63,000 + $18,360 = $81,360
The ending inventory will be calculated as:
360 units at $65 = $23,400
270 units at $68 = $18,360
270 units at $70 = $18,900
Total value of ending inventory = $60,660
Therefore, the cost of goods sold for the month using LIFO method will be $81,360. Hence, the best choice is C.

Chess Top Uses the Periodic Inventory System