Asked by Serena Espino on Jul 26, 2024
Verified
Assuming that the company uses the perpetual inventory system, determine the May 31 inventory balance using the LIFO inventory cost method.
A) $324
B) $372
C) $320
D) $364
LIFO Inventory
A method of inventory valuation where the last items to be added to the inventory are the first ones to be used or sold, assuming that the cost of goods sold is based on the most recent prices.
Inventory Balance
The total value of a company's inventory at the end of an accounting period, including raw materials, work-in-progress, and finished goods.
Perpetual Inventory System
A Perpetual Inventory System continuously updates inventory records and cost of goods sold every time a transaction occurs, providing real-time inventory information.
- Determine inventory values by employing different valuation methods like LIFO, FIFO, and the average cost method in the context of both perpetual and periodic inventory systems.
Verified Answer
Ending inventory for the month of May using LIFO = 2 units at $20 from the May 3 purchase + 1 unit at $24 from the May 17 purchase + 10 units at $30 from the May 30 purchase = $40 + $24 + $300 = $364?
Learning Objectives
- Determine inventory values by employing different valuation methods like LIFO, FIFO, and the average cost method in the context of both perpetual and periodic inventory systems.
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