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I will appreciate if anyone can show me the procediment to find the answers that I already have in LIFO and FIFO method.

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:

Sep. 1 Inventory 20 units at $20
4 Sold 10 units
10 Purchased 30 units at $25
17 Sold 20 units
30 Purchased 10 units at $30

If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

a.$800

b.$750 ANSWER

c.$650

d.$700

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Answer:

b.$750 ANSWER

Explanation:

As we know that

The ending inventory under LIFO is

= Total Purchase - Total sales

where,

Total purchase is = 20 units × $20 + 30 units × $25 + 10 units × $30

= $400 + $750 + $300

= $1,450

And, the sales is

= 10 units × $20 + 20 units × $25

= $200 + $500

= $700

So, the ending inventory under the LIFO method is

= $1,450 - $700

= $750

Or we can say, the closing inventory units is

= Total purchase units - total sales units

= 60 units - 30 units

= 30 units

We assume that the sale on Sep 17 is to made from the Sep 17 purchase

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