addison, inc. uses a perpetual inventory system. information about one inventory item for the month of…

addison, inc. uses a perpetual inventory system. information about one inventory item for the month of september follows. sep. 1 inventory 20 units at $20\n4 sold 10 units\n10 purchased 30 units at $25\n17 sold 20 units\n30 purchased 10 units at $30\nif addison uses lifo, the september 30 inventory balance is\na. $800\nb. $750\nc. $700\nd. $650

addison, inc. uses a perpetual inventory system. information about one inventory item for the month of september follows. sep. 1 inventory 20 units at $20\n4 sold 10 units\n10 purchased 30 units at $25\n17 sold 20 units\n30 purchased 10 units at $30\nif addison uses lifo, the september 30 inventory balance is\na. $800\nb. $750\nc. $700\nd. $650

Answer

Explanation:

Step1: Calculate units available for sale

Initial inventory: 20 units. Purchases: 30 + 10 = 40 units. Total units available = 20+40 = 60 units.

Step2: Calculate total units sold

Units sold: 10 + 20 = 30 units.

Step3: Calculate ending - inventory units

Ending - inventory units = 60 - 30 = 30 units.

Step4: Determine cost of ending inventory under LIFO

Under LIFO, we assume the last - in items are sold first. So, the ending inventory consists of the earliest units. First, we take 20 units from the beginning inventory at $20 each and 10 units from the first purchase. Cost of ending inventory = (20×$20)+(10×$25) = $400 + $250 = $650.

Answer:

D. $650