8 The Churchill Corporation uses a periodic inventory system and the LIFO invent

Question

8 The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 20,000 units consisted of the following, listed in chronological order of acquisition 2,000 units at a cost of $8.00 per unit $96,000 8,000 units at a cost of $9.00 per unit 72,000 ts kipped During 2018, inventory quantity declined by 10,000 units. All units purchased during 2018 cost $12.00 per unit. eBook Required: Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material. Print ferences

Explanation / Answer

Before-tax LIFO liquidation profit = $ 32,000

Total Units liquidated = 10,000 Units

Units liquidated multiplied by the difference between their current cost and acquisition cost

8,000 x ($12-9)                                           = $ 24,000

2,000 x ($12-8) = $ 8,000

Before-tax LIFO liquidation profit = $ 32,000

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