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27 April, 15:57

Inventory records for Herb's Chemicals revealed the following:

March 1, 2016, inventory: 1,000 gallons @ $7.20 = $7,200

Purchases: Sales:

Mar. 10 600 gals @ $7.25 Mar. 5 400 gals

Mar. 16 800 gals @ $7.30 Mar. 14 700 gals

Mar. 23 600 gals @ $7.35 Mar. 20 500 gals

Mar. 26 700 gals

Ending inventory assuming LIFO in a periodic inventory system would be:

$5,040.

$5,055.

$5,075.

$5,135.

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Answers (1)
  1. 27 April, 16:11
    0
    The correct answer is A.

    Explanation:

    Giving the following information:

    March 1, 2016, inventory: 1,000 gallons at $7.20 = $7,200

    Purchases:

    Mar. 10: 600 gals at $7.25

    Mar. 16: 800 gals at $7.30

    Mar. 23: 600 gals at $7.35

    Sales:

    Mar. 5: 400 gals

    Mar. 14: 700 gals

    Mar. 20: 500 gals

    Mar. 26: 700 gals

    Under periodic inventory, the cost of the ending inventory is calculated at the end of the period.

    Total units = 3,000

    Units sold = 2,300

    Ending inventory = 700 units

    LIFO (last-in, first-out) inventory method:

    Inventory = 700*7.20 = $5,040
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