ansfield Company has a periodic inventory system and uses the LIFO method to assign costs to inventory and cost of goods sold. Consider the following information:
| Date | Description | # of units | Cost per unit |
| January 1 | Beginning inventory | 100 | $5 |
| October 2 | Purchase | 75 | $4 |
| December 5 | Sales | 125 |
What amounts would be reported as the cost of goods sold and ending inventory balances for the period?
| a. | Cost of goods sold $625; Ending inventory $175 | |
| b. | Cost of goods sold $755; Ending inventory $225 | |
| c. | Cost of goods sold $550; Ending inventory $250 | |
| d. | Cost of goods sold $600; Ending inventory $200 |
Answer :amounts would be reported as the cost of goods sold and ending inventory balances for the period is
| c. | Cost of goods sold $550; Ending inventory $250 |
Working notes for the above answer
Calculation for amounts would be reported as the cost of goods sold for the period is as follow
In LIFO method we record invetory as Last in First Ount (L.I.F.O.) so we record coost of goods sold as follow
| December 5 | Sales | 125
|
So Cost of goods sold is 550
Calculation for amounts would be reported as the cost of goods sold and ending inventory balances for the period is as follow
|
As per LIFO method costs to inventory ois $ 250
