Asked by Elizabeth Offer on May 16, 2024
Verified
Pasquale has the following inventory information. July 1 Beginning Inventory 20 units at $19$3807 Purchases 70 units at $201,40022 Purchases 10 units at $24240$2,020\begin{array}{rllr}\text { July } 1 & \text { Beginning Inventory } & 20 \text { units at } \$ 19 & \$ 380 \\7 & \text { Purchases } & 70 \text { units at } \$ 20 & 1,400 \\22 & \text { Purchases } & 10 \text { units at } \$ 24 & 240\\& & &\$2,020\end{array} July 1722 Beginning Inventory Purchases Purchases 20 units at $1970 units at $2010 units at $24$3801,400240$2,020 A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the LIFO inventory method the amount allocated to cost of goods sold for July is
A) $1390.
B) $1414.
C) $1470.
D) $1440.
LIFO Inventory Method
"Last In, First Out," an inventory costing method where the last items purchased are the first ones sold, affecting the cost of goods sold and ending inventory value.
Cost Of Goods Sold
The direct costs tied to the production of products sold by a company, including materials and labor.
Merchandise Inventory
Merchandise Inventory includes goods that are purchased and held for resale by a retail or wholesale business, representing one of the primary sources of revenue.
- Become familiar with the calculation and consequences of distinct inventory systems (FIFO, LIFO, Average Cost) on statements of finance.
Verified Answer
The cost of the 20 units purchased on July 23 is:
20 units x $68 = $1360
The cost of the 10 units purchased on July 30 is:
10 units x $72 = $720
Therefore, the total cost of goods sold for July is:
$1360 + $720 = $2080
Since there were 50 units available for sale (20 from July 23 + 20 from July 8 + 10 from July 30), the cost per unit is:
$1390 / 50 units = $27.80
Thus, the cost of goods sold for July is:
30 units x $27.80 = $834
Therefore, the answer is D) $1440.
Learning Objectives
- Become familiar with the calculation and consequences of distinct inventory systems (FIFO, LIFO, Average Cost) on statements of finance.
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