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14 February, 12:40

Sales during the year were 500 units. Beginning inventory was 250 units at a cost of $5 per unit. Purchase 1 was 400 units at $6 per unit. Purchase 2 was 200 units at $7 per unit. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system) was:

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  1. 14 February, 15:49
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    COGS under LIFO: $ 3,200

    Explanation:

    Beginning inventory was 250 units at a cost of $5 per unit. Purchase 2 was 200 units at $7 per unit.

    Beginning 250 units at $5 = $ 1,250

    1st P 400 units at $6 = $ 2,400

    2nd P 200 units at $7 = $ 1,400

    Sales: 500 units

    Under LIFO the first untis are ending inventory while the it sales the last units. Thus we must "grab" from the bottom row:

    sales 500:

    2nd P 200 units at $7 = $ 1,400

    500 - 200 = 300 additional units to grab

    1st P 300 units at $6 = $ 1,800

    COGS under LIFO: $ 3,200
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