Sheridan Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 280 $17 $ 4,760 April 15 purchase 420 20 8,400 April 23 purchase 300 22 6,600 1,000 $19,760 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.

Answer:

Closing inventory - $10,160

Costs of goods sold - $9,600

Explanation:

Under the LIFO Method, the cost of good sold equals to

= April 23 units × cost per unit + Remaining units × cost per unit

= 300 units × $22 + 150 units × $20

= $6,600 + $3,000

= $9,600

Since the firm has sold 450 units, so out of which 300 units sold at a price of $22 and the remaining 150 units sold at a price of $20

The ending inventory equals to

= Remaining units × cost per unit + April 1 × cost per unit

= 270 units × $20 + 280 units × $17

= $5,400 + $4,760

= $10,160

Since on April 23, the 420 units were purchase, out of which 150 units are transferred to the cost of good sold and the remaining units 270 units at $20 is transferred to the ending inventory

Final answer:

Using LIFO, the April cost of goods sold for the Sheridan Company is $9,600, and the ending inventory at April 30 is valued at $10,160.

Explanation:

When using the Last In, First Out (LIFO) inventory valuation method, Sheridan Company will calculate the cost of goods sold (COGS) and ending inventory based on the assumption that the most recently purchased items are sold first. The April cost of goods sold is calculated by adding the cost of the units sold, starting with the most recent purchase, until reaching the total number of units sold (450 units). The April 30 inventory is then determined by subtracting the sold units' cost from the total cost of available inventory.

Let's calculate:

Thus, the April 30 inventory is $10,160, and the April cost of goods sold is $9,600.

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