The Following Lots of a Particular Commodity Were Available for Sale

question 48

Multiple Choice

The following lots of a particular commodity were available for sale during the year: $\begin{array}{ll}\text { Beginning invent ory } & 10 \text { units at } \$ 30 \\\text { First purchase } & 25 \text { units at } \$ 32 \\\text { Second purchase } & 30 \text { units at } \$ 34 \\\text { Third purchase } & 10 \text { units at } \$ 35\end{array}$ The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the LIFO method?

• A) $655
• B) $620
• C) $690
• D) $659

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where goods purchased or produced first are the first ones to be sold or used.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting the cost of goods sold.

Periodic Inventory System

A periodic inventory system is a method of inventory valuation in which inventory is physically counted at the end of a specific period to determine the cost of goods sold and ending inventory.

Average Cost Method

An inventory costing method wherein the cost of goods sold and remaining inventory is valued at the average cost of all inventory items purchased during a period.