Question

Sheffield Bookstore had 500 units on hand at January 1, costing $8 each. Purchases and sales during the month of January were as follows: Date Purchases Sales Jan. 14 375 @ $13 17 260 @ $12 25 260 @ $10 29 270 @ $16 Sheffield does not maintain perpetual inventory records. According to a physical count, 375 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:

Answer 1

Answer:

The cost of the inventory at January 31, under the LIFO method is: $3,000

Explanation:

The LIFO is a method used to account value for inventory. Under the method, the last item of inventory purchased is the first one sold.

1. Jan 1,  Inventory 500 units, $8 per unit. Total $4,000

2. Purchasing:

Jan. 14,  375 units, $13 per unit, total $4,875

Jan. 17,  260 units, $12 per unit, total $3,120

Jan. 25,  260 units, $10 per unit, total $2,600

Jan. 29,  270 units, $16 per unit, total $4,320

Total purchasing in Jan: 1,165 units, cost $14,915

At January 31, 375 units were on hand, the company sold:

500+1,165-375 = 1,290 units

Sheffield Bookstore uses LIFO method, Merchandise in stock are 375 units with cost per unit  at Jan. 1. Inventory at 31 January is 375 x $8 = $3,000

Cost of goods sold = $4,000 + $14,915 - $3,000 = $15,915