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A company's inventory records report the following in November of the current year: Date Activities Units Acquired at Cost Units Sold at RetailNovember 1 Beginning inventory 5 units @ $28 = $140  November 2 Purchase 10 units @ $30 = $300  November 8 Sales   12 units @ $62November 12 Purchase 6 units @ $33 = $198  Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?Multiple Choice$334$356$378$244$282

Question

A company's inventory records report the following in November of the current year: Date Activities Units Acquired at Cost Units Sold at RetailNovember 1 Beginning inventory 5 units @ 28=28 = 140  November 2 Purchase 10 units @ 30=30 = 300  November 8 Sales   12 units @ 62November12Purchase6units@62November 12 Purchase 6 units @ 33 = 198 UsingtheLIFOperpetualinventorymethod,whatwastheamountrecordedinthecostofgoodssoldaccountforthe12unitssold?MultipleChoice198  Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?Multiple Choice334356356378244244282

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Solution

Under the LIFO (Last In, First Out) perpetual inventory method, the last goods purchased are the first ones to be sold.

Here's how you calculate the cost of goods sold:

  1. On November 8, 12 units were sold. According to LIFO, we start with the last purchased batch, which is 10 units @ 30=30 = 300.

  2. However, we sold 12 units, not just 10. So, we have to go to the next most recent batch to account for the remaining 2 units. The next batch is the beginning inventory, which is 5 units @ 28=28 = 140. But we only need the cost for 2 units, so 2 units @ 28=28 = 56.

  3. Add the cost from step 1 and step 2 to get the total cost of goods sold. 300(fromthe10units)+300 (from the 10 units) + 56 (from the 2 units) = $356.

So, the amount recorded in the cost of goods sold account for the 12 units sold is $356.

This problem has been solved

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