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Calculate the Cost of Goods Sold (COGS) for 120 units sold using the LIFO periodic method, given the following purchase data: Jan 1: 20 units @ 10, Jan 25: 40 units @ 11, Jun 25: 40 units @ 12, Oct 10

Accounting

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Answer

\text{}\1,460\text{}$

Step-by-step solution

3 steps

  1. Identify the total units available for sale and the units sold.

    Units available for sale:

    • January 1, 2025: 20 units at $10
    • January 25, 2025: 40 units at $11
    • June 25, 2025: 40 units at $12
    • October 10, 2025: 50 units at 13Totalunitsavailableforsale=13 Total units available for sale = 20 + 40 + 40 + 50 = 150$ units. Units sold = 120 units.

  2. Calculate the Cost of Goods Sold (COGS) using the LIFO (Last-In, First-Out) periodic method.

    Under LIFO, the last units purchased are assumed to be the first ones sold. We need to account for 120 units sold, starting from the most recent purchases.

    • From October 10, 2025 purchase: 50 units at 13Cost=13 Cost = 50 \text{ units} \times $13/unit = $650Remainingunitstoaccountfor= Remaining units to account for =120 - 50 = 70$ units

    • From June 25, 2025 purchase: 40 units at 12Cost=12 Cost = 40 \text{ units} \times $12/unit = $480Remainingunitstoaccountfor= Remaining units to account for =70 - 40 = 30$ units

    • From January 25, 2025 purchase: We need 30 units from this layer at 11Cost=11 Cost = 30 \text{ units} \times $11/unit = $330Remainingunitstoaccountfor= Remaining units to account for =30 - 30 = 0$ units

  3. Sum the costs to find the total COGS.

    COGS=$650+$480+$330=$1,460\text{COGS} = \$650 + \$480 + \$330 = \$1,460

    The company's cost of goods sold for the 120 items sold is \boxed{\text{}\1,460}$

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