Question

Thompson Company utilizes the LIFO retail inventory method. Its cost-to-retail percentage is 50% based on beginning inventory and 55% based on current-period purchases. The company determined that during the current period a new layer was added with retail value of $100,000. The new layer at cost should be____________.

Answer 1

$55,000

Step-by-step explanation:

$100,000 x 55%

Answer 2

the most recent purchase

Step-by-step explanation:

The new layer at cost should be____________. the most recent purchases.

LIFO assigns an amount to cost of goods sold on income statement that approximates its current cost , it also better matches the current costs with revenues in computing gross profit.

LIFO Last in First Out is the method in which inventories are valued assuming that the most recent purchases have been sold out first. When LIFO is used with the periodic system ,cost of goods sold is assigned costs from the most recent purchases.