Asked by Isiwat Taiwo on Jul 30, 2024

verifed

Verified

The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year according to the LIFO method?

A) $655
B) $620
C) $690
D) $659

Periodic System

An accounting system where inventory is updated at specific periods rather than continuously, typically used for calculating cost of goods sold at the end of an accounting period.

Ending Inventory

The aggregate value of products available for purchase at the conclusion of a financial period.

LIFO Method

Last In, First Out method; an inventory valuation technique where the latest items added to inventory are the first ones removed during sales.

  • Ascertain inventory levels through the utilization of distinct valuation approaches, including LIFO, FIFO, and average cost, in both the perpetual and periodic inventory environments.
verifed

Verified Answer

ZK
Zybrea KnightAug 03, 2024
Final Answer :
B
Explanation :
According to LIFO method, the newest units are assumed to be sold first, and therefore the cost of goods sold will be calculated using the cost of the oldest units. The cost of the 40 units sold during the year will be (10*$22)+(10*$21)+(10*$20)+(10*$19) = $820. The cost of the 20 units remaining will be (10*$18)+(10*$17) = $350. Therefore, the ending inventory balance will be $350, which is option B.