Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?- $3,485.- $3,445.- $3,500.- $3,472.- $3,461.

$3,445

Explanation:

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.

On October 2, it purchased 20 units at $205 each.

11 units are sold on October 4.

Using the LIFO perpetual inventory method, the value of inventory after the October 4 sale will be:

Date   Particulars                    Unit   Cost  Balance

Oct 1  Beginning inventory     8     $200

Oct 2 Purchases                   20    $205    28

Oct 4 Sales                             11     $205    17

The 17 units are made up of the balance of 9 from the purchases on Oct 2, and the 8 units of opening inventory.

Hence the value of inventory after the sale is (9 x $205) + (8 x $200) = $3,445

- $3,485.- $3,445.- $3,500.- $3,472.- $3,461.

$3,445

Explanation:

Last in First Out (LIFO) perpetual inventory method records the most recent good that enter the store as the one that is sold first.

From the question, 11 units sold will be deducted from the 20 units purchased on October 2, and we therefore have 9 units left for October 2. Based on this, the value of inventory after the October 4 sale can be calculated as follows:

Value of October 1 inventory = 8 × $200 = $1,600

Value of remaining October 2 inventory = (20 - 11) × $205 = 9 × $205 = $1,845

Value of inventory after the October 4 sale = $1,600 + $1,845 = $3,445

Therefore, the value of inventory after the October 4 sale is $3,445.

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