16. Hazelton Corporation uses a periodic inventory system and the LIFO method to

Question

16.  Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with $59,000 in inventory of its only product. The beginning inventory consisted of the following layers:

4000 units @ 6 = 24,000

         6000 units @ 7 = 35,000

               total               59,000

During 2013, 6,000 units were purchased at $8 per unit and during 2014, 7,000 units were purchased at $9 per unit. Sales, in units, were 7,000 and 12,000 during 2013 and 2014, respectively.

Required:

1. Calculate cost of goods sold for 2013 and 2014.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2013 and 2014.

Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with $59,000 in inventory of its only product. The beginning inventory consisted of the following layers: 4000 units @ 6 = 24,000 6000 units @ 7 = 35,000 total 59,000 During 2013, 6,000 units were purchased at $8 per unit and during 2014, 7,000 units were purchased at $9 per unit. Sales, in units, were 7,000 and 12,000 during 2013 and 2014, respectively. Required: Calculate cost of goods sold for 2013 and 2014. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2013 and 2014.

Explanation / Answer

2013 = $55,000; 2014 = $97,000

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