Homework SourseThe following data is available for one of the products sold
The following data is available for one of the products sold by Learning Tree, Inc., which uses the perpetual inventory system:
If the LIFO method is used, what is the amount assigned to cost of goods sold for the 2,500 units sold on May 10?
| May 1 | On hand, 1,000 units at $2.00 each | $2,000 | ||
| 5 | Purchased 2,000 units at $2.75 each | 5,500 | ||
| 10 | Sold 2,500 units at $16 each | |||
| 18 | Purchased 2,000 units at $4.00 each | 8,000 | ||
| 24 | Sold 1,500 units at $12 each | |||
| 31 | On hand, 1,000 units |
Solution
As per LIFO;cost of goods sold=(2000 units@$2.75)+(500 units@$2)
=$6500.
As per LIFO;goods purchased last are sold off first.Hence 2500 units sold would consist of 2000 units of May 5 purchases and the balance(2500-2000)=500 units of May 1 inventory.
