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Perpetual inventory using LIFO Beginning inventory, purchases, and sales for Item 88-HX are as follows: Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of goods sold on July 27 and (b) the inventory on July 31.
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Perpetual inventory using LIFO
Beginning inventory, purchases, and sales for Item 88-HX are as follows:
Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of goods sold on July 27 and (b) the inventory on July 31.
Determine the following using last-in, first-out:
a) Cost of goods sold.
b) Ending inventory.
Explanation of Solution
Perpetual Inventory System:
Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases, and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.
Last-in-First-Out (LIFO): In this method, items purchased recently are sold first. So, the value of the ending inventory consist the initial cost for the remaining unsold items.
Calculate the cost of goods sold and ending inventory.
| Date | Purchases | Cost of goods sold | Ending inventory | ||||||
| Quantity (units) | Unit cost | Total cost | Quantity (units) | Unit cost | Total cost | Quantity (units) | Unit cost | Tot... | |
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