A company had inventory on November 1 of 5 units at a cost of $19 each. On November 2, they purchased 10 units at $21 each. On November 6 they purchased 6 units at $24 each. On November 8, 10 units were sold for $54 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

Question

Business

Fisher Bridges

3 May, 22:35

A company had inventory on November 1 of 5 units at a cost of $19 each. On November 2, they purchased 10 units at $21 each. On November 6 they purchased 6 units at $24 each. On November 8, 10 units were sold for $54 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

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Answers (1)

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Litzy · Answer 1

The answer is $221

Explanation:

LIFO means Last in First out i. e the inventory that was bought last will be sold out first.

Opening balance:

November 1: 5 units at $19 each

Purchased:

November 2: 10 units at $21 each

Purchased:

November 6: 6 units at $24 each

Sold:

November 8: 10 units at $54 each

Total number of units bought plus Beginning inventory = 5 + 10 + 6 = 21 units

Therefore, number of units remaining at November 8 after sales is 21 - 10

=11 units.

So according to LIFO, we have:

6 units at $21 = $126

5units at $19 = $95

$95 + $126

=$221