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A business had opening inventory of 300 units valued at $4.50 per unit on 1 May. The following receipts and issues were recorded in May.
2 May issue 200units
7 May receipt 500units @$4.80 per unit
13 May issue 400units
20 May receipt 500units @ $5.00 per unit
28 May issue 450units
What is the value of closing inventory?
FIFO LIFO
A $1180 $1250
B $1250 $1180
C $1250 $730
D $1180 $730I understand how answer is calculated using FIFO but i do not understand the solution using LIFO.
I calculated closing inventory as 250 units.
Are we not supposed to value all these units at $4.50 (i.e $1125)which is the value of opening inventory since we are using LIFO?
Please help. I’m stuck.You have to work through each receipt and issue in date order.
So on 2 May, the 200 units issued must have been from the opening inventory of 300. So only 100 of them are left.
On 7 May, they bought 500, so now they have 100 at $4.50 and 500 at $4.80.
On 13 May they issued 400. So now they have 100 at $4.50 and 100 at $4.80.
On 10 May they bought 500, so now they have 100 at $4.50 and 100 at $4.80 and 500 at $5.00
On 28 May they issued 450, so now they have 100 at $4.50, 100 at $4.80 and 50 at $5.00
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