The LIFO inventory method assumes that the cost of the latest units pruchased ar

Question

The LIFO inventory method assumes that the cost of the latest units pruchased are
a) the last to be allocated to cost of goods sold
b)the first to be allocated to ending inventory
c)the first to be allocated to cost of goods sold
d)not allocated to cost of goods sold or ending inventory


A company just starting business made the following four inventory purchases in June:
June 1 150 units $390
June 10 200 units $585
June 15 200 units $630
June 28 150 units $510
$2,115

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO method the value of the ending inventory on June 30 is
A) $536
b) $668
c)$1,447
d)$1,564

Explanation / Answer

The LIFO inventory method assumes that the cost of the latest units pruchased are c)the first to be allocated to cost of goods sold Using the LIFO method the value of the ending inventory on June 30 is SO ending inv will have 150 Units of JUn1 1= $390 + 50 units from Jun 10 = $585*(50/200) = $390+ $146.25 = 536.25. A) $536

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