Question

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is
$536.
$668
$1,447
$1,564

Answer 1

Answer:

• The first choice: $536.

Explanation:

LIFO inventory method implies that the last merchandise that entered was the first to leave the inventory.

Hence, the 200 units counted on June 30 correspond to the older merchandise. That is 150 units entered on June 1, for $390, and 50 units entered on June 10.

The cost of the 50 units entered on June 10 is:

• $585/200units × 50 units = $146.25

Then, the total value of the ending inventory on June 30 is $390 + $146.25 = $536.25.

Rounded to the nearest dollar, that is $536, the first choice.