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Under the periodic LIFO method, 19 of 30 units available are sold (beginning 10 at $4, then 10 at $5, then 10 at $6). What is the cost of merchandise sold?
A$85
B$95
C$105
D$150
Answer & Solution
Correct answer: C. $105
1. Periodic LIFO draws the 19 units sold from the latest stock.
2. First 10 units from the $6 purchase: $10 \times \$6 = \$60$.
3. Next 9 units from the $5 purchase: $9 \times \$5 = \$45$.
4. Cost of merchandise sold = $\$60 + \$45 = \$105$.
5. Rule out $\$85$: that is the periodic FIFO cost of sales.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.2 "Periodic Inventory System", p.121_
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