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njabate13
Apr 1, 2009, 08:08 PM
Stuck on this problem for 2 hours, just don't understand the concept and could really use some help...

July 1 Beginning Inventory 10 units at $90
July 5 Purchases 60 units at $84
July 14 Sale 40 units
July 21 Purchases 30 units at $87
July 30 Sale 28 units

Question is, using this information, assume that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis, also what is the ending inventory based on LIFO. Please explain in fully as I have mulitple problems like this and really need to understand it. Thanks
pready
Apr 2, 2009, 03:55 PM
LIFO means Last In First Out, therefore your Jul 14 sale will consist of inventory that was was purchased on Jul 5, and your Jul 30 sale will consist of your inventory purchase on Jul 21.

Your COGS will be your JUL 14 transaction of 40 units @<hidden> $84 and your Jul 30 transaction of 28 units @<hidden> $87.

Your ending inventory will be:
10 units @<hidden> $90, 20 units @<hidden> $84, and 2 units @<hidden> $87.