Question

The inventory data for an item for November are: Nov. 1 Inventory 20 units at $19 4 Sale 10 units 10 Purchase 30 units at $20 17 Sale 20 units 30 Purchase 10 units at $21 Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO?

a. $600
b. $590
c. $610
d. $580

Answer 1

Answer:

b. $590

Explanation:

LIFO is the inventory costing method which assumes that the item purchased at last will be sold first and the item purchases earlier will be sold at last.

According to LIFO the inventory cost of McCarthy Company is as follow:

Date               Description    Price   Unit      Total    Balance

November 1      Opening      $19        20     $1,800   $1,800

November 4     Sale             $19        (10)     ($190)    $1,610

November 10    Purchase    $20       30      $600    $2,210

November 17    Sale             $20      (20)   ($400)    $1,924

November 30   Purchase    $21        10      $210      $2,134

Sale Cost in November = $190 + $400 = $590