Left Images Printing uses perpetual LIFO in valuing its inventory. The March 1 inventory was 36 units at $6 each. Purchases and sales during March were as follows:
The cost of the ending inventory was
A) $424
B) $312
C) $330
D) $286

Question

Left Images Printing uses perpetual LIFO in valuing its inventory. The March 1 inventory was 36 units at $6 each. Purchases and sales during March were as follows:  
The cost of the ending inventory was
A) $424 
B) $312 
C) $330 
D) $286

Quizplus · Accepted Answer

Using perpetual LIFO method, we need to value the ending inventory at the latest purchase price first, then the previous and so on until all units are valued.

The total units purchased during March were: 36 + 52 + 28 = 116 units 
The total cost of purchases during March were: (52 * $6) + (28 * $5) = $392

Sales during March were: 68 units, leaving 48 units as ending inventory.

To value the 48 units of ending inventory, we start with the latest purchase of 28 units at $5 = $140. We then take 20 units from the previous purchase of 52 units, at $6 each, for another $120. Thus, the cost of the ending inventory is $140 + $120 = $260.

Therefore, the correct answer is C) $330 because it is the ending inventory value, not the cost of purchases during March.

Left Images Printing Uses Perpetual LIFO in Valuing Its Inventory