Use the following information for the month of May: May 1 Beginning inventory 40
ID: 2444483 • Letter: U
Question
Use the following information for the month of May:
May 1 Beginning inventory 40 units @ $16
7 Purchases 70 units @ $20
18 Sales 25 units
22 Purchases 40 units @ $22
29 Sales 20 units
Assuming that a LIFO perpetual inventory system is used, what is ending inventory?
$1,880
$1,980
$2,080
$2,030
$1,830
Explanation / Answer
Perpetual Inventory Valuation - LIFO Units Price/Unit Total Cost Sales closing inventory opening inventory 40 16 640 40 units @ 16 = 640 Purchased on May 7 70 20 1400 40 units @ 16 = 640 70 units @ 20 = 1400 Sold on May 18 25 units 40 units @ 16 = 640 45 units @ 20 = 900 Purchased on May 22 40 22 880 40 units @ 16 = 640 45 units @ 20 = 900 40 units @ 22 = 880 Sold on May 29 20 units 40 units @ 16 = 640 45 units @ 20 = 900 20 units @ 22 = 440 Hence closing inventory on perpetual inventory - LIFO = 640 + 900 + 440 = 1980 Hence 2nd option $ 1980 is correct