Accounting (LIFO)

Question

Perpetual inventory using LIFO

Beginning inventory, purchases, and sales for Item 88-HX are as follows:

DateLine Item DescriptionValue
July 1	Inventory	82 units @ $30
July 8	Sale	66 units
July 15	Purchase	91 units @ $34
July 27	Sale	76 units

Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of goods sold on July 27 and (b) the inventory on July 31.

a. Cost of goods sold on July 27 fill in the blank 1 of 2

b. Inventory on July 31 fill in the blank 2 of 2

Answer 1

Let’s walk through the Perpetual Inventory using LIFO step-by-step for Item 88-HX.

Starting Inventory (July 1):

1. 82 units @ $30 = $2,460

July 8 Sale: 66 units sold

1. Under LIFO, we sell the most recent inventory — but only the July 1 inventory is available so far.
2. Sell 66 units @ $30 = $1,980

Inventory after July 8:

1. 82 - 66 = 16 units @ $30 = $480
2. 
   

July 15 Purchase: 91 units @ $34

1. Add 91 units @ $34 = $3,094
2. Inventory now:
3. 16 units @ $30 = $480
4. 91 units @ $34 = $3,094
5. Total = $3,574

July 27 Sale: 76 units sold

Under LIFO, sell the most recent purchases first:

1. From July 15 Purchase:
2. 76 units needed
3. Sell 76 units @ $34 = 76 × $34 = $2,584

a. Cost of Goods Sold on July 27 = $2,584

Inventory on July 31:

1. After selling 76 of the 91 purchased @ $34:
2. Remaining = 15 units @ $34 = $510
3. Still have 16 units @ $30 = $480

b. Inventory on July 31 = $510 + $480 = $990

Final Answers:

a. COGS on July 27 = $2,584

b. Inventory on July 31 = $990