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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
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Chapter 6, Problem 23CE, Inventory Costing: LIFO Refer to the information for Filimonov Inc. and assume that the company uses

Inventory Costing: LIFO

Refer to the information for Filimonov Inc. and assume that the company uses a perpetual inventory system.

Required:

Calculate the cost of goods sold and the cost of ending inventory using the LIFO inventory costing method.

To determine

Concept introduction:

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

LIFO method:

LIFO Stands for Last in First Out. Under this method, the latest units purchased are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the oldest units purchased.

To calculate:

The cost of goods sold and ending inventory using the Perpetual LIFO inventory costing method.

Explanation

The cost of goods sold and ending inventory using the Perpetual LIFO inventory costing method is calculated as follows:

Filimonov Inc.
Perpetual Inventory Record-LIFO
For the quarter ending on Dec. 31, 2018
Purchases Cost of Goods Sold Inventory Balance
Date Unit Rate Total Cost Unit Rate Total Cost Unit Rate Total Cost
June. 1 200 $ 10 $ 2,000
June. 9 300 $ 12 $ 3,600 200 $ 10 $ 2,000
300 $ 12 $ 3,600
June...

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