A company sells garden hoses and uses the perpetual inventory system to account

Question

A company sells garden hoses and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during September were as follows:

September 1: Beginning balance of 18 units at $13 each
September 12: Purchased 30 units at $14 each
September 19: Sold 24 units at $30 selling price each
September 20: Purchased 24 units at $17 each
September 27: Sold 27 units at $30 selling price each

If the ending inventory is reported at $276, what inventory method was used?

Explanation / Answer

If the ending inventory is reported at $ 276, the inventory method was used Last in first out (LIFO) method.

beginning Balance (18*13)                  234 Purchased 30 units @ 14 each                  420 Sold 24 units @ 30 selling price (24*14)                (336) Purchased 24 units @ 17 each                  408 Sold 27 units @ 30 selling price (24*17 + 3*14)                (450) ending inventory                  276

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