The Foxworthy Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 40,000 units consisted of the following, listed in chronological order of acquisition:
24,000 units at a cost of $6.00 per unit = $144,000
16,000 units at a cost of $7.00 per unit = 112,000

During 2018, inventory quantity declined by 18,000 units. All units purchased during 2018 cost $8.00 per unit.

Required:
Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material.

Question

The Foxworthy Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 40,000 units consisted of the following, listed in chronological order of acquisition:
24,000 units at a cost of $6.00 per unit = $144,000
16,000 units at a cost of $7.00 per unit = 112,000

During 2018, inventory quantity declined by 18,000 units. All units purchased during 2018 cost $8.00 per unit.

Required:
Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material.

Quizplus · Accepted Answer

The Answer of The Foxworthy Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 40,000 units consisted of the following, listed in chronological order of acquisition:
24,000 units at a cost of $6.00 per unit = $144,000
16,000 units at a cost of $7.00 per unit = 112,000

During 2018, inventory quantity declined by 18,000 units. All units purchased during 2018 cost $8.00 per unit.

Required:
Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material.

The Foxworthy Corporation Uses a Periodic Inventory System and the LIFO