Using the last-in, first-out periodic method, the value of closing inventory is:
A) $4400.
B) $4192.
C) $1840.
D) $3460.

Question

Quizplus · Accepted Answer

To use the last-in, first-out periodic method, we assume that the most recent purchases are sold first.

We have the following information:

Beginning inventory: 20 units at $80 = $1600
Purchases:
- 30 units at $90 = $2700
- 40 units at $100 = $4000

We assume that the 40 units purchased at $100 are the last to be sold. Therefore, we start by valuing the 40 units at $100, which gives a total value of $4000.

Next, we move on to the 30 units purchased at $90. We assume that all 30 units were sold, so we add $2700 to our running total.

Finally, we move on to the beginning inventory of 20 units at $80. We assume that all 20 units were sold, so we add $1600 to our running total.

Our total cost of goods sold is $8300.

To calculate the value of closing inventory, we add up the cost of the 20 units beginning inventory and the remaining 10 units from the 30 units purchased at $90. This gives a total value of $1680.

Therefore, the value of closing inventory is $1680.

The best choice is B.

Using the Last-In, First-Out Periodic Method, the Value of Closing