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Shown below is activity for one of the products of Denver Office Equipment: January 1 balance, 550 units @ $60 $33,000 Purchases: January 10: 550 units @ $65 January 20: 1, 100 units @ $57 Sales: January 12: 950 units January 28: 800 units Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses LIFO and a perpetual inventory system.
Expert Answer
January 1:
Beginning Inventory = 550 units * $60
Beginning Inventory = $33,000
January 10:
550 units at $65 were purchased.
January 12:
950 units were sold which include 550 units from purchases of January 10 and 400 units from Beginning Inventory
Cost of Goods Sold = 550 * $65 + 400 * $60
Cost of Goods Sold = $59,750
January 20:
1,100 units at $57 were purchased.
January 28:
800 units were sold from purchases of January 20.
Cost of Goods Sold = 800 * $57
Cost of Goods Sold = $45,600
Total Cost of Goods Sold = $59,750 + $45,600
Total Cost of Goods Sold = $105,350
Ending Inventory will include 300 units from January 20 Purchases and 150 units from Beginning Inventory
Ending Inventory = 300 * $57 + 150 * $60
Ending Inventory = $26,100
