A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale? A) $304 B) $296 C) $288 D) $280 E) $276

Question

Santos

Business

3 May, 17:47

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale? A) $304 B) $296 C) $288 D) $280 E) $276

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Ben Hart · Answer 1

Answer: A $304

Explanation: LIFO means last in first out. It means it is the older inventory that is sold off first.

On November 1, total value of inventory = $20 * 5 = $100

On November 2, total value of inventory = $100 + ($22 * 10) = $320

On November 6, total value of inventory = $320 + ($25*6) = $470

On November 8, 8 units of inventory was sold. This would be taken from the older stock of inventory. These inventories are the those from November 1 and 2.

The remaining inventory after the sale = (7 * 22) + 150 = $304