Beginning inventory, purchases, and sales for an inventory item are as follows: Sep. 1 Beginning Inventory 25 units @ $12 5 Sale 12 units 17 Purchase 28 units @ $15 30 Sale 18 units. Assuming a perpetual inventory system and the last-in, first-out method: a. Determine the cost of the goods sold for the September 30 sale. $ b. Determine the inventory on September 30. $
Beginning inventory, purchases, and sales for an inventory item are as follows: Sep. 1 Beginning Inventory 25 units @ $12 5 Sale 12 units 17 Purchase 28 units @ $15 30 Sale 18 units. Assuming a perpetual inventory system and the last-in, first-out method: a. Determine the cost of the goods sold for the September 30 sale. $ b. Determine the inventory on September 30. $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![### Inventory Management: Last-In, First-Out (LIFO) Method
#### Inventory Data:
- **Beginning Inventory (Sep. 1):**
- 25 units @ $12
- **Transactions:**
- **Sep. 5 - Sale:** 12 units
- **Sep. 17 - Purchase:** 28 units @ $15
- **Sep. 30 - Sale:** 18 units
#### Problem Statement:
Assume a perpetual inventory system using the Last-In, First-Out (LIFO) method.
**Questions to Answer:**
a. Determine the cost of goods sold for the September 30 sale.
**Answer:** $ _______
b. Determine the inventory on September 30.
**Answer:** $ _______
---
### Explanation:
1. **LIFO Method Overview:**
The Last-In, First-Out (LIFO) method assumes that the most recently purchased items are sold first.
2. **Transaction Analysis Using LIFO:**
- **For Sep. 5 Sale:** Since there have been no new purchases, this sale of 12 units will use the beginning inventory units priced at $12 each.
- **For Sep. 17 Purchase:** After purchasing 28 units at $15 each, the inventory will be:
- 25 units @ $12
- 28 units @ $15
- **For Sep. 30 Sale:** We use the LIFO method:
- 18 units will be sold from the most recent purchase of 28 units @ $15 each.
3. **Cost of Goods Sold (COGS) for Sep. 30 Sale:**
- The cost of the 18 units sold on Sep. 30 will be:
- 18 units @ $15 = $270
4. **Ending Inventory Calculation:**
- After the Sep. 30 sale, the remaining inventory will be:
- (28 - 18) = 10 units @ $15 = $150 (from the Sep. 17 purchase)
- 25 units @ $12 = $300 (remaining from initial inventory)
- Total Ending Inventory Value:
- $150 + $300 = $450
---
### Final Answers:
a. The cost of the goods sold for the September 30 sale is $270.
b. The inventory on September 30 is $450.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad3224f2-a218-486a-a82c-0188b146b919%2Fed9e4ec6-0ab8-411d-a356-c6ba4b338179%2F7tjrur_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Inventory Management: Last-In, First-Out (LIFO) Method
#### Inventory Data:
- **Beginning Inventory (Sep. 1):**
- 25 units @ $12
- **Transactions:**
- **Sep. 5 - Sale:** 12 units
- **Sep. 17 - Purchase:** 28 units @ $15
- **Sep. 30 - Sale:** 18 units
#### Problem Statement:
Assume a perpetual inventory system using the Last-In, First-Out (LIFO) method.
**Questions to Answer:**
a. Determine the cost of goods sold for the September 30 sale.
**Answer:** $ _______
b. Determine the inventory on September 30.
**Answer:** $ _______
---
### Explanation:
1. **LIFO Method Overview:**
The Last-In, First-Out (LIFO) method assumes that the most recently purchased items are sold first.
2. **Transaction Analysis Using LIFO:**
- **For Sep. 5 Sale:** Since there have been no new purchases, this sale of 12 units will use the beginning inventory units priced at $12 each.
- **For Sep. 17 Purchase:** After purchasing 28 units at $15 each, the inventory will be:
- 25 units @ $12
- 28 units @ $15
- **For Sep. 30 Sale:** We use the LIFO method:
- 18 units will be sold from the most recent purchase of 28 units @ $15 each.
3. **Cost of Goods Sold (COGS) for Sep. 30 Sale:**
- The cost of the 18 units sold on Sep. 30 will be:
- 18 units @ $15 = $270
4. **Ending Inventory Calculation:**
- After the Sep. 30 sale, the remaining inventory will be:
- (28 - 18) = 10 units @ $15 = $150 (from the Sep. 17 purchase)
- 25 units @ $12 = $300 (remaining from initial inventory)
- Total Ending Inventory Value:
- $150 + $300 = $450
---
### Final Answers:
a. The cost of the goods sold for the September 30 sale is $270.
b. The inventory on September 30 is $450.
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