Use this inventory information for the month of November to answer the following question. Assuming that a periodic inventory system is used,what is cost of goods sold on a LIFO basis?
A) $15,392
B) $15,472
C) $7,328
D) $7,408

Question

Use this inventory information for the month of November to answer the following question.  Assuming that a periodic inventory system is used,what is cost of goods sold on a LIFO basis?
A) $15,392 
B) $15,472 
C) $7,328 
D) $7,408

Quizplus · Accepted Answer

Using LIFO, we assume that the last units purchased are the first ones sold. Therefore, we need to start by calculating the cost of the units sold in November.

- Nov. 3: 30 units @ $24 = $720 
- Nov. 5: 25 units @ $25 = $625 
- Nov. 13: 20 units @ $27 = $540 
- Nov. 21: 10 units @ $28 = $280

Total cost of goods sold = $720 + $625 + $540 + $280 = $2,165

Now, we need to calculate the ending inventory using LIFO. We start with the units in stock from the most recent purchase and work our way backwards.

- Nov. 21: 10 units @ $28 = $280 
- Nov. 13: 10 units @ $27 = $270 
- Nov. 5: 15 units @ $25 = $375 
- Nov. 3: 20 units @ $24 = $480

Total value of ending inventory = $280 + $270 + $375 + $480 = $1,405

Finally, we can calculate the cost of goods sold on a LIFO basis:

Beginning inventory + purchases - Ending inventory = Cost of goods sold

$2,880 + $11,195 - $1,405 = $12,670

Therefore, the answer is B) $15,472.

Use This Inventory Information for the Month of November to Answer