Question

Inventory records for Herb's Chemicals revealed the following:


March 1, 2016, inventory: 1,000 gallons @ $7.20 = $7,200

Purchases: Sales:
Mar. 10 600 gals @ $7.25 Mar. 5 400 gals
Mar. 16 800 gals @ $7.30 Mar. 14 700 gals
Mar. 23 600 gals @ $7.35 Mar. 20 500 gals
Mar. 26 700 gals

Ending inventory assuming LIFO in a periodic inventory system would be:

$5,040.

$5,055.

$5,075.

$5,135.

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

March 1, 2016, inventory: 1,000 gallons at $7.20 = $7,200

Purchases:

Mar. 10: 600 gals at $7.25

Mar. 16: 800 gals at $7.30

Mar. 23: 600 gals at $7.35

Sales:

Mar. 5: 400 gals

Mar. 14: 700 gals

Mar. 20: 500 gals

Mar. 26: 700 gals

Under periodic inventory, the cost of the ending inventory is calculated at the end of the period.

Total units= 3,000

Units sold= 2,300

Ending inventory= 700 units

LIFO (last-in, first-out) inventory method:

Inventory= 700*7.20= $5,040