question#15. why is the answer $639,000 ry balance using dollar-value LIFO? What

Question

question#15. why is the answer $639,000

ry balance using dollar-value LIFO? What is the 2011 invento A) $135,000. B) $128,500. C) $122,750. D) $125,750. 15. The following information was derived fr llowing information was derived from the 2010 accounting records of Perez Co Perez's Goods Perez's Central Warehouse Held by Consigness Beginning inventory Purchases Freight-in Transportation to consignees Freight-out Ending inventory A) $570,000. $130,000 575,000 10,000 $ 14,000 70,000 30,000 145,000 5,000 8,000 20,000 B) $600,000. C) $634,000. D) $639,000. l Kmk o had 450 units of product A on hand at January 1,2010, costing $42 each.

Explanation / Answer

Beginning inventory = $130000 + 14000 = $144000

Add Purchase = $575000 + 70000 = $645000

Add Freight in = $10000

Add Transportation to consignee = $5000 as its not sell hence included

Freight = not included (notes given)

Less Ending inventory = $145000 + 20000 =$ 165000

Total balance = $639000

Note: Transportation-in or freight-in costs are part of the cost of goods purchased. The cost of goods (or any asset) includes all costs necessary to get an asset in place and ready for use.

Transportation-out or freight-out costs are not product costs and are not inventoriable. Transportation-out costs are costs of selling the products and will appear as a selling expense

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