Assume that Q-Mart uses a periodic LIFO inventory system. During the year, it sold 14 units. Calculate the dollar value of its cost of goods sold for the period. DateActivity Jan. 1Beginning Inventory10 @ $12Jan. 5Purchase10 @ $15Jan. 30Purchase10 @ $18Feb. 8Sale14 unitsMultiple choice question.$240$210$150$180
Question
Assume that Q-Mart uses a periodic LIFO inventory system. During the year, it sold 14 units. Calculate the dollar value of its cost of goods sold for the period. DateActivity Jan. 1Beginning Inventory10 @ 15Jan. 30Purchase10 @ 240150$180
Solution
To calculate the cost of goods sold (COGS) using the LIFO (Last-In, First-Out) method, we start by selling the most recently purchased items first. Here's how we calculate it:
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On February 8, Q-Mart sold 14 units. According to LIFO, we start with the last batch of units purchased.
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The last batch was bought on January 30, with 10 units at 18 = $180.
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We still need to account for 4 more units (14 sold - 10 from the last batch). The next batch to consider is the one bought on January 5, with 10 units at 15 = $60.
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Add up the costs from step 2 and 3 to get the total COGS. So, 60 (from the second last batch) = $240.
So, the dollar value of its cost of goods sold for the period is $240.
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