Tenace Corporation uses a perpetualinventory system and has provided the following information about one of their laptop computers: DateTransactionNumber of UnitsCost per Unit1/1Beginning inventory100$8005/5Purchase200$9008/10Purchase300$1,00010/15Purchase200$1,050 During the year, 275 laptop computers were sold on 5/8 and 475 laptops were sold on 10/20. What was cost of goods sold using the LIFOcost flow assumption?Group of answer choicesA)$717,500B)$730,000C)$703,125D)$725,500e)None of the above

Last in first out (LIFO) is one of the methods used to account inventory. LIFO records the most recently produced units as first sold. Under LIFO, the costs of the most recently purchased products are the first to be expensed as the cost of goods sold. The other inventory accounting methods are the weighted average cost method and the first in first out (FIFO)method.Calculating cost of goods sold using LIFO: Date Particulars Purchase Sales Balance Unit Rate$ Amount$ Unit Rate$ Amount$ Unit Rate$ Amount$ 1/1 Beginning 100 800 80000 5/5 Purchase 200 900 180000 100 800 80000 200 900 180000 5/8 Sales 200 900 180000 75 800 60000 25 800 20000 8/10 Purchase 300 1000 300000 25 800 20000 300 1000 300000 10/15 Purchase 200 1050 210000 25 800 20000 300 1000 300000 200 1050 210000 10/20 Sales 200 1050 210000 25 800 20000 275 1000 275000 25 1000 25000 Total 700 690000 750 725000 50 45000 Therefore, the cost of goods sold is $725000.Options A, B, C, and D are incorrect because according to the computation, the cost of goods sold by T Company using the LIFO method is $725000 for the sale of 750 units. Thus, $717500, $730000, $703,125, and $725500 are, respectively, the incorrect amounts. Option E is correct, i.e., none of the above, because T Company's cost of goods sold using the LIFO method is $725000 as per the above computation. Hence, under the LIFO method, the cost of goods sold by T Company is $725000.

Answered: Tenace Corporation uses a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Tenace Corporation uses a perpetualinventory system and has provided the following information about one of their laptop computers:

Date	Transaction	Number of Units	Cost per Unit
1/1	Beginning inventory	100	$800
5/5	Purchase	200	$900
8/10	Purchase	300	$1,000
10/15	Purchase	200	$1,050

During the year, 275 laptop computers were sold on 5/8 and 475 laptops were sold on 10/20.

What was cost of goods sold using the LIFOcost flow assumption?

Group of answer choices

A)$717,500

B)$730,000

C)$703,125

D)$725,500

e)None of the above

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