Question

1.

Kelly’s Couture made the following purchases of sweaters during the year:

Beginning Inventory........25 at $35 each
March.............................20 at $42 each
June...............................30 at $38 each
September......................15 at $45 each

An inventory shows that 24 sweaters remain.
Find the value of the inventory using the LIFO method.

Answer 1

LIFO method

Units Available for sale = 25 + 20 + 30 + 15 = 90 units

Ending Inventory = 24 units

Units Sold = (90 – 24) = 66 units

Cost of Goods Sold

Sales from September = 15 units x $45 = $675

Sales from June = 30 units x $38 = $1140

Sales from March = 20 units x $42 = $900

Sales from Beginning Inventory = 1 unit x $25 = $25

Total: 66 units = $2740

Ending Inventory from beginning inventory = 24 units x 35 = $840