A company sells garden hoses and uses the perpetual inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during September were as follows: September 1: Beginning balance of 18 units at $13 each
September 12: Purchased 30 units at $14 each
September 19: Sold 24 units at $30 selling price each
September 20: Purchased 24 units at $17 each
September 27: Sold 27 units at $30 selling price each
If the ending inventory is reported at $276,what inventory method was used?
A)LIFO method.
B)FIFO method.
C)Weighted average method.
D)Specific identification method.
E)Retail inventory method.

Question

Quizplus · Accepted Answer

Under the LIFO method, the last items purchased are the first ones to be sold. The ending inventory consists of the earliest purchases. For the ending inventory of $276, it would include 18 units from September 1 at $13 each and 3 units from September 12 at $14 each. Calculation: (18 units * $13) + (3 units * $14) = $234 + $42 = $276. This matches the ending inventory value, indicating the LIFO method was used.

A Company Sells Garden Hoses and Uses the Perpetual Inventory