Melbourne Company uses the perpetual inventory method. Melbourne purchased 1,000 units of inventory that cost $5.75 each. At a later date the company purchased an additional 1,100 units of inventory that cost $6.25 each. If Melbourne uses a LIFO cost flow method, and sells 1,300 units of inventory, the amount of ending inventory appearing on the balance sheet will be:

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Business

Tamara Grimes

4 November, 02:45

Melbourne Company uses the perpetual inventory method. Melbourne purchased 1,000 units of inventory that cost $5.75 each. At a later date the company purchased an additional 1,100 units of inventory that cost $6.25 each. If Melbourne uses a LIFO cost flow method, and sells 1,300 units of inventory, the amount of ending inventory appearing on the balance sheet will be:

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Jon Jones · Answer 1

Amount of ending inventory=$4,600

Explanation:

The value of closing inventory = Total cost of purchases - cost of goods sold

Opening inventory = 1,000 * $5.75=5750

Cost of purchases = 1,100 * $6.25 = 6875

Cost of goods sold

(1100*$6.25) + (200 * $5.75) = 8025

Amount of ending inventory = 5750 + 6875 - 8025 = $4,600

Amount of ending inventory=$4,600