Asked by Deanne Pawhay on Jul 25, 2024
Verified
What is the ending inventory balance at the end of the year using the LIFO method?
A) $1,685
B) $1,575
C) $1,805
D) $3,815
LIFO Method
An inventory valuation method where the last items produced or bought are the first ones to be expensed, leading to lower reported profits and taxes when prices are rising.
Periodic System
An accounting system where updates to inventory levels and costs of goods sold are made at the end of an accounting period rather than being tracked continuously.
Ending Inventory
The total value of all inventory, including products that are partially or fully completed, that is still on hand at the end of an accounting period.
- Evaluate the balances in inventory, costs of goods sold, and the metrics pertaining to inventory turnover.
Verified Answer
DP
Dayra PimentelJul 26, 2024
Final Answer :
B
Explanation :
Using the LIFO method, we assume that the last items purchased are the first items sold. Therefore, we calculate the ending inventory by valuing the 25 units on hand at the end of the year using the price of the first 25 units purchased during the year, which is $63 per unit.
Ending Inventory = 25 units x $63 per unit = $1,575
Therefore, the correct choice is B.
Ending Inventory = 25 units x $63 per unit = $1,575
Therefore, the correct choice is B.
Learning Objectives
- Evaluate the balances in inventory, costs of goods sold, and the metrics pertaining to inventory turnover.