Beginning inventory purchases and sales data for tennis rack

Beginning inventory, purchases, and sales data for tennis rackets are as follows 11 units @ 7 units @ 16 units 21 units @ 10 units Inventory Purchase Sale Purchase Sale r. $16.00 $21.00 14 21 25 $25.00 Assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO Select the correct answer cost of merchandise sold $541.00 and ending inventory $307.00 cost of merchandise sold $541.00 and ending inventory $432.00 cost of merchandise sold $416.00 and ending inventory $432.00 cost of merchandise sold $541.00 and ending inventory $650.00

Solution

Cost of goods sold of Apr. 14 Sale:

(7 units x $21) + (9units x $16)

= $147 + $144

= $291

Cost of goods sold of Apr. 25 Sale:

10 units x $25 = $250

Total cost of goods sold = $291 + $250 = $541.

Ending Inventory:

Apr. 3 Inventory - 2 units @ $16 = $32

Apr. 21 Purchases - 11 units @ $25 = $275

Total Ending Inventory = $307

Therefore, Cost of merchandise sold $541 and ending inventory is $307

Option A is correct answer.