Alphabet Company, which uses the periodic inventory method, purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February, it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A, D, E, H, J and N in October.There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.If Alphabet Company uses the LIFO method,what is the cost of its ending inventory?
A) $24
B) $42
C) $58
D) $76

Question

Quizplus · Accepted Answer

The LIFO method assumes that the last items purchased are the first items sold. Therefore, the ending inventory would consist of the letters purchased in March (M thru R) at a cost of $7 per letter. There are 5 letters in this range, so the cost of the ending inventory would be 5 x $7 = $35.

Alphabet Company, Which Uses the Periodic Inventory Method, Purchases Different