**Question:**Wels Company purchased two identical inventory items. The first purchase cost $54 and the second cost $56. The company sold one of the items for $64. If the company uses the **LIFO cost flow method**, the balance in the inventory account after the sales transaction will be:**Multiple Choice Options:**- $55- $8- $56- $54*Explanation:***LIFO (Last-In, First-Out) Method:** This inventory valuation method assumes that the last item purchased is the first one to be sold. 1. *Inventory Purchase Details*: - Item 1 Cost: $54 - Item 2 Cost: $562. *Sale Details*: - Selling Price: $64 - Sold Item Cost (LIFO): $56 (The cost of the last item purchased)3. *Inventory Balance Calculation*: - Remaining Inventory Cost: $54 (Cost of the first item purchased, as the second item was sold)The correct answer is **$54**.

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Description: **Question:**Wels Company purchased two identical inventory items. The first purchase cost $54 and the second cost $56. The company sold one of the items for $64. If the company uses the **LIFO cost flow method**, the balance in the inventory accoun

Answered: Welss Company purchased two identical…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Step 1: LIFO method

LIFO Stands for Last in First Out. In the LIFO method, the goods purchased last are sold first.
It is a method used to manage and account for inventory and the flow of goods or assets in various contexts, particularly in accounting and inventory management. In a LIFO system, the most recently acquired or produced items are the first to be removed or sold, while older or previously acquired items are used or sold last.

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