A company's inventory records report the following in November of the current year: BeginningNovember 15 units @ $10 PurchaseNovember 210 units @ $12 PurchaseNovember 66 units @ $14 On November 8, it sold 18 units for $40 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 18 units sold?

Question

Eden Key

Business

30 September, 01:59

A company's inventory records report the following in November of the current year: BeginningNovember 15 units @ $10 PurchaseNovember 210 units @ $12 PurchaseNovember 66 units @ $14 On November 8, it sold 18 units for $40 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 18 units sold?

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Jacoby · Answer 1

The cost of goods sold account for the 18 units sold was recorded $224

Explanation:

The LIFO is a method used to account value for inventory. Under the method, the last item of inventory purchased is the first one sold.

The company uses the LIFO perpetual inventory method:

1. November 1, Inventory 15 units, $10 per unit. Total $150

2. November 2, Purchased 10 units, $12 per unit. Total $120

The inventory $270

15 units, $10 per unit. Total $150

10 units, $12 per unit. Total $120

3. November 6, Purchased 6 units, $14 per unit. Total $84

The inventory: $354

15 units, $10 per unit. Total $150

10 units, $12 per unit. Total $120

6 units, $14 per unit. Total $84

4. November 8, sold 18 units,

Cost of good sold = 6x$14 + 10 x $12 + 2 x $10 = $84 + $120 + $ 20 = $224

Inventory = 13 x $10 = $130