Question 1-2

If Entity A uses the Last-in, First-out (LIFO) method for the inventory measurement:

        (1) What is the amount of ending inventory at January 31, 20x1?

        (2) What is the amount of cost of goods sold for January 20x1?

Date

Units

Purchased

Units Sold

Inventory

Cost

per Unit

Amount

1

Beginning inventory

1,000

$50

$50,000

11

Purchased

1,200

$52

$62,400

27

Purchased

1,400

$56

$78,400

Total

$190,800

16

Sold

1,700

Total

3,600

1,700

Ending inventory

1,000

$50

$50,000

Ending inventory

900

$52

$46,800

Total Ending inventory

$96,800

Cost of goods sold

$94,000

        (1) Ending inventory at January 31, 20x1 = 1,000 x $50 + 900 x $52 = $96,800

        (2) Cost of goods sold

                = Beginning inventory + Purchases - Ending inventory

                = $50,000 + $62,400 + $78,400 - $96,800

                       = $190,800 - $96,800 = $94,000