I am working on the following question and i have the solutions to the question,

Question

I am working on the following question and i have the solutions to the question, but i am confused on why we use the units/costs on April 1 and April 4 for LIFO. I would think to use the units/costs of April 29 and April 21 since those are the last ones and we are using LIFO.

E8-14 (FIFO, LIFO and Average-Cost Determination) John Adams Company’s record of transactions for the month of April was as follows.

Instructions (a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average-cost.

1) 5,300-4,600= 700 units ending inventory

600@ 6.00=$3,600

100@6.08= 608

$3,600+$608=$4,208

8-14 (FIFO, LIFO and Average-Cost Determination) John Adams Company's record of transactions for he month of April was as follows. Purchases Sales 500 $10.00 9 1,40010.00 600 11.00 23 1,200 11.00 900 12.00 on hand) 600 @ April 3 4 8 13 21 29 1,500 6.08 800 6.40 1,200 6.50 700 6.60 500 6.79 27 4,600 5,300

Explanation / Answer

Inventory according to LIFO:

Units at the End = Total Purchase - Sales

Units at the End = 5,300 - 4,600 = 700

These 700 Units will be valued at the earliest purchase price.

Beginning = 600 x 6 = $3,600

100 x 6.08 = $608

Total value of closing inventory = $4,208

Here we have taken cost of two earliest date because question is about closing inventory. Means the inventory remain unsold. So, according to LIFO, those come last out first so the unsold would be of earliest cost.

Cost:

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