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A perpetual-system merchandiser has: 6/1 beginning 10 units at $4; 6/5 sell 1; 6/10 buy 10 at $5; 6/16 sell 12; 6/22 buy 10 at $6; 6/30 sell 6. Using LIFO, what is the ending inventory balance at 6/30?
A$45
B$52
C$58
D$65
Answer & Solution
Correct answer: B. $52
1. The 11 units left under LIFO are 7 units at $4 ($\$28$) plus 4 units at $6 ($\$24$).
2. Ending inventory = $\$28 + \$24 = \$52$.
3. Check: available $\$150$ - cost of sales $\$98 = \$52$.
4. Rule out $\$65$: that is the FIFO ending balance, which is higher because FIFO leaves the costlier recent units in stock.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.1 "Perpetual Inventory System", p.117_
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