Asked by Pratik Sanyal on May 22, 2024
Verified
Mesa Company's inventory records show the following data for the month of September: Units‾ Unit Cost ‾ Inventory, September 1 100$3.35 Purchases: September8 4503.50 September 18 3503.70\begin{array} { l c c } & \underline { \text { Units} } & \underline { \text { Unit Cost } } \\\text { Inventory, September 1 } &100& \$ 3.35 \\\text { Purchases: September8 } & 450 & 3.50 \\\quad\quad\quad\quad\quad\text { September 18 }& 350 & 3.70\end{array} Inventory, September 1 Purchases: September8 September 18 Units100450350 Unit Cost $3.353.503.70
A physical inventory on September 30 shows 250 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses LIFO inventory costing and a periodic inventory system.
LIFO
Stands for Last In, First Out, an inventory valuation method where the most recently produced or purchased items are recorded as sold first.
Periodic Inventory System
An inventory accounting system where inventory counts are performed and updated at specific intervals to determine cost of goods sold and ending inventory levels.
Ending Inventory
The value of goods available for sale at the end of an accounting period. It is the beginning inventory plus purchases minus the cost of goods sold.
- Compute the termination inventory value and the cost incurred on goods sold by leveraging multiple inventory costing approaches.
Verified Answer
Cost of goods sold: (350\quad ( 350(350 units ×$3.70)+(300\times \$ 3.70 ) + ( 300×$3.70)+(300 units ×$3.50)=$2,345\times \$ 3.50 ) = \$ 2,345×$3.50)=$2,345
Learning Objectives
- Compute the termination inventory value and the cost incurred on goods sold by leveraging multiple inventory costing approaches.
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