Required information [The following information applies to the questions displayed below.] In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 220 units at $6 on January 1, (2) 640 units at $7 on January 8, and (3) 940 units at $8 on January 29. Assuming 1,185 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under LIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.) Cost of Goods Available for Sale Ending Inventory Cost of Goods Sold LIFO

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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**Educational Content on Inventory Calculation Using LIFO**

**Required Information:**

In the first month of operations, a bookstore named Literacy for the Illiterate acquired inventory in the following order:

1. 220 units at $6 each on January 1
2. 640 units at $7 each on January 8
3. 940 units at $8 each on January 29

Assuming there are 1,185 units on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and the cost of goods sold using the Last-In, First-Out (LIFO) method. A periodic inventory system is used for these calculations. (Make sure to round the "Cost per Unit" to two decimal places.)

**LIFO Calculation Table:**

- **Cost of Goods Available for Sale**: ___
- **Ending Inventory**: ___
- **Cost of Goods Sold**: ___

**Explanation:**

When applying the LIFO method, the last items purchased are considered the first to be sold. In this context, the calculation of ending inventory and cost of goods sold will be based on these assumptions.
Transcribed Image Text:**Educational Content on Inventory Calculation Using LIFO** **Required Information:** In the first month of operations, a bookstore named Literacy for the Illiterate acquired inventory in the following order: 1. 220 units at $6 each on January 1 2. 640 units at $7 each on January 8 3. 940 units at $8 each on January 29 Assuming there are 1,185 units on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and the cost of goods sold using the Last-In, First-Out (LIFO) method. A periodic inventory system is used for these calculations. (Make sure to round the "Cost per Unit" to two decimal places.) **LIFO Calculation Table:** - **Cost of Goods Available for Sale**: ___ - **Ending Inventory**: ___ - **Cost of Goods Sold**: ___ **Explanation:** When applying the LIFO method, the last items purchased are considered the first to be sold. In this context, the calculation of ending inventory and cost of goods sold will be based on these assumptions.
Expert Solution
Step 1: Define LIFO

Last in first out method is an inventory valuation method. According to this method, the most recently purchased items are sold first. The cost of goods sold includes the last purchases and it means the ending inventory will include the first purchases.  

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