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Inventory records for Herb's Chemicals revealed the following: March 1, 2021, inventory: 1,500 gallons @ $8.20...

Inventory records for Herb's Chemicals revealed the following:


March 1, 2021, inventory: 1,500 gallons @ $8.20 per gallon = $12,300

Purchases: Sales:
Mar. 10 700 gals @ $ 8.25 Mar. 5 500 gals
Mar. 16 900 gals @ $ 8.30 Mar. 14 800 gals
Mar. 23 700 gals @ $ 8.35 Mar. 20 600 gals
Mar. 26 800 gals


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

Multiple Choice

  • $9,020.

  • $9,135.

  • $9,075.

  • $9,035.

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Answer #1

Answer: $9,020

.

Calculation of number of units sold
Mar. 5 500 gals
Mar. 14 800 gals
Mar. 20 600 gals
Mar. 26 800 gals
Total units sold 2700 gals

.

LIFO (Periodic)
Units

(a)		 Cost per Unit

(b)		 Total

(a x b)
Beginning inventory 1500 $8.20 $12,300
Purchases
   Mar. 10 700 $8.25 $5,775
   Mar. 16 900 $8.30 $7,470
   Mar. 23 700 $8.35 $5,845
Goods Available for Sale  

[1,500 + 700 + 900 + 700 = 2,300]                 

[$12,300 + $5,775 + $7,470 + $5,845 = $31,390]		 2300 $31,390
Cost of Goods Sold:
   Units from March 23 Purchases 700 $8.35 $5,845
   Units from March 16 Purchases 900 $8.30 $7,470
   Units from March 10 Purchases 700 $8.25 $5,775
   Units from Beginning Inventory 400 $8.20 $3,280
   Total Cost of Goods Sold               [$5,845 + $7,470 + $5,775 + $3,280] 2700 $22,370
Ending Inventory                                    

[1.500 + 2,300 - 2,700 = 1,100]

[Goods available for sales - Total cost of goods sold = $31,390 - $9,020]		 1100 $9,020
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