Use this information to answer the following question. A periodic inventory system is used; ending inventory is 147 units.
What is cost of goods sold under LIFO?
A) $2,236
B) $6,236
C) $4,236
D) $8,236

Question

Use this information to answer the following question.  A periodic inventory system is used; ending inventory is 147 units.
What is cost of goods sold under LIFO?
A) $2,236 
B) $6,236 
C) $4,236 
D) $8,236

Quizplus · Accepted Answer

The cost of goods sold under LIFO can be calculated as the sum of the cost of the units sold, multiplied by the cost of the most recent inventory purchases. Since this is a periodic inventory system, the cost of each unit is not known, but the cost of the most recent inventory purchase is. Therefore, the cost of goods sold can be calculated as follows: Cost of most recent inventory purchase = (147 units x $29 per unit) = $4,263. Cost of goods sold under LIFO = (Total units sold x Cost of most recent inventory purchase) - Ending inventory = [(1,000 units -147 units) x $29 per unit] - $4,263 = $4,236. Therefore, the correct answer is C.

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