The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the LIFO method?
A) $1,645
B) $1,525
C) $1,730
D) $3,740

Question

The following lots of a particular commodity were available for sale during the year:  The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the LIFO method?
A) $1,645 
B) $1,525 
C) $1,730 
D) $3,740

Quizplus · Accepted Answer

In LIFO method, the cost of the most recent inventory is used to calculate the cost of goods sold and the cost of ending inventory. Therefore, the cost of the most recent lots available for sale during the year will be used first to calculate the cost of goods sold and the cost of ending inventory will be the cost of the oldest lots. The cost of goods sold can be calculated as:
(9 × $70) + (15 × $75) + (21 × $80) = $1,935
The cost of ending inventory can be calculated as:
(4 × $70) + (11 × $75) + (10 × $80) = $1,525

The Following Lots of a Particular Commodity Were Available for Sale