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16 September, 07:01

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers:

Date

1/1

5/5

8/10

10/15

Transaction

Beginning Inventory

Purchase

Purchase

Purchase

Number of units

100

200

300

200

Cost per unit

$800

$900

$1000

$1,100

During the year, Lauer sold 750 laptop computers.

What was cost of goods sold using the LIFO cost ow assumption?

A. $725,000.

B. $740,000.

C. $735,000.

D. $720,000.

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Answers (1)
  1. 16 September, 08:31
    0
    Answer: Option (B) is correct.

    Step-by-step explanation:

    Given that,

    Total laptop sold = 750

    Since LIFO method is used, the sales shall be out of the inventories latest.

    Therefore, 750 laptops shall be sold out of the following purchases:

    October:

    Total = Number of units * cost per unit

    = 200 * $1,100

    = $220,000

    August:

    Total = Number of units * cost per unit

    = 300 * $1000

    = $300,000

    May:

    Total = Number of units * cost per unit

    = 200 * $900

    = $180,000

    January:

    Total = Number of units * cost per unit

    = 50 * $800

    = $40,000

    Cost of goods sold = October + August + May + January

    = $220,000 + $300,000 + $180,000 + $40,000

    = $740,000
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