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Basic Question 19 of 26
SportsTrader began operations on January 1, 2011. It has been using LIFO since then for inventory accounting. The following stock record card for footballs was taken from the records at the end of year.
B. $640
C. $595
- 01/01 Beginning inventory 10 units, at $20 each, total $200
- 05/09 30 footballs purchased, at $22 each, total $660
- 08/08 15 footballs purchased, at $25 each, total $375
- 12/31 Ending inventory: 25 footballs
What is the value of the inventory at the end of year?
A. $530
B. $640
C. $595
User Contributed Comments 10
| User | Comment |
|---|---|
| Bibhu | since its LIFO, we should check the dates. Since 25 remaining, last 15 are sold along with 15 purchased on 05/09/2011. |
| olukayode | yes, in Lifo, EI equals oldest prices and since only 10 was bought initially the remaining 15 will be in the next old price |
| johntan1979 | Correction: It should be lowest prices, not oldest prices. Oldest doesn't necessarily mean lowest. |
| Bududeen | johntan1979 be careful...its oldest prices...its just a coincidence that, here the oldest prices are also the lowest prices...in situations wherein the prices fluctuate or decline then u may get it all wrong |
| schweitzdm | I could use some clarification on this one. I thought the answer was C. |
| robbiecow | Under the periodic system above you must calculate the ending inventory based on what is physically left in the "stock room." Since you are using LIFO; this means you are selling the last thing that you made or purchased. In the above question that would be 15 units @ $25 and 10 units @ $22. This will equal your COGS. Now calculate what is left, or ending inventory. (30 purchased @ $22 less the 15 you sold) plus the 10 units that you started with @ $20. Hope that helps |
| farhan92 | not enough information given..are these footballs or american footballs? |
| vfelix26 | Lmao... farhan92 |
| choas69 | make funny jokes like these then you will become zalaan not farhaan. |
| pigletin | asking for the end inventory value, not the COGS. |
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Learning Outcome Statements
describe the measurement of inventory at the lower of cost and net realisable value and its implications for financial statements and ratios
CFA® 2024 Level I Curriculum, Volume 2, Module 6.