acct. question?

Question

Use the following inventory information for the month of July.

July 1: Beginning Inventory (20 units at $20) = $400
July 7: Purchases (70 units at $21) = $1,470
July 22: Purchases (10 units at $22) = $220

A physical count of merchandise inventory on July 30 reveals that there are 35 units on hand.

So, my question is:

Using the LIFO inventory method, the amount allocated to ending inventory in July is:

a) $680
b) $715
c) $700
d) $665

and, Using the FIFO method, the amount allocated to cost of goods sold for july is:

a) $1345
b) $1380
c) $1390
d) $1425

THANK YOU!

Answer 1

Under LIFO, the ending inventory would have come from the oldest batches, so the 35 comprised 20 @ $20 plus another 15 @ $21 = $715. The answer is (b).

Under FIFO, the ending inventory would have come from the latest batches, so the 35 comprised 10 @ $22 plus another 25 @ $21 = $745. The cost of goods sold is cost of goods available $2,090 minus ending inventory of $745 = $1,345. The answer is (a).