Accounting for Inventory Sales - Intermittent LIFO example

The video tutorial explains how to apply the LIFO (Last In, First Out) method for inventory accounting, focusing on calculating the cost of goods sold (COGS) for intermittent purchases and sales. It compares LIFO with FIFO (First In, First Out), highlighting that while journal entries for purchases remain the same, the COGS and inventory values differ. The tutorial walks through two sales transactions, detailing the calculations for each using LIFO, and concludes with a summary of total revenue, COGS, gross profit, and ending inventory.

What is the primary difference between LIFO and FIFO methods?

• FIFO and LIFO are the same.

• LIFO uses the oldest inventory first.

• LIFO uses the most recent inventory first.

• FIFO uses the most recent inventory first.

In the first sale using LIFO, what was the total sales revenue?

• $250

• $4,375

• $2,050

• $1,800

How many units were pulled from the beginning inventory for the first sale?

• 200 units

• 175 units

• 25 units

• 150 units

What was the total COGS for the second sale using LIFO?

• $6,650

• $3,600

• $3,000

• $50

Which purchase was used first for the second sale under LIFO?

• Beginning inventory

• June 2nd purchase

• May 1st purchase

• January 15th purchase

What is the gross profit calculated in the summary section?

• $8,700

• $15,125

• $6,425

• $200

How many units are left in the ending inventory after all transactions?

• 25 units

• 20 units

• 15 units

• 10 units