Question

Melbourne Company uses the perpetual inventory method. Melbourne purchased 1,000 units of inventory that cost $5.75 each. At a later date the company purchased an additional 1,100 units of inventory that cost $6.25 each. If Melbourne uses a LIFO cost flow method, and sells 1,300 units of inventory, the amount of ending inventory appearing on the balance sheet will be:

Answer 1

Answer:

Amount of ending inventory=$4,600

Explanation:

The value of closing inventory = Total cost of purchases - cost of goods sold

Opening inventory  = 1,000× $5.75=5750

Cost of purchases = 1,100 ×$6.25 = 6875

Cost of goods sold

(1100×$6.25) + (200× $5.75)= 8025

Amount of ending inventory = 5750 + 6875  - 8025 = $4,600

Amount of ending inventory=$4,600