Question

Alpha First Company just began business and made the following four inventory purchases in June:

June 1 150 units $ 1,000
June 10 200 units 1,300
June 15 200 units 1,800
June 28 150 units 1,450
$5,500
A physical count of merchandise inventory on June 30 reveals that there are 150 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is:

Answer 1

Using the LIFO inventory method, the value of the ending inventory on June 30 is -$482,000.

Step-by-step explanation:

The LIFO (Last In, First Out) inventory method assumes that the most recent inventory purchases are sold first. To calculate the value of the ending inventory on June 30 using the LIFO method, we start by calculating the cost of units sold. We subtract the cost of the units sold from the total cost of inventory purchases to obtain the value of the ending inventory.
Cost of units sold:

June 28 purchase: 150 units x $1,450 = $217,500

June 15 purchase: 150 units x $1,800 = $270,000

Total cost of units sold: $217,500 + $270,000 = $487,500

Value of ending inventory: Total cost of inventory purchases - Cost of units sold

$5,500 - $487,500 = $-482,000