Question

Question:Super Mart, a regional convenience store chain, maintains milk inventory by the gallon.

The first month’s milk purchases and sales at its Freeport, Florida, location follow:

Nov. 2 Purchased 11 gallons @ \(2.15 each

6 Purchased 2 gallons @ \)2.80 each

8 Sold 6 gallons of milk to a customer

13 Purchased 3 gallons @ $2.85 each

14 Sold 4 gallons of milk to a customer

Requirements

2. Determine the amount that would be reported in ending merchandise inventoryon November 15 using the LIFO inventory costing method

Short answer

The ending inventory on Nov.15 amounts to$12.9

Step-by-step solution

Step-by-Step-SolutionStep1: Perpetual Inventory LIFO Method

The Perpetual Inventory method is a system of maintaining inventory records continuously after every purchase and sale. LIFO is a method of allocating cost based on issuing assumption of last in first out.

So perpetual inventory under the LIFO method maintains the continuous record of inventory based on the last in first out assumption.

Calculation of ending inventory

Date	Purchase/opening	Sales	Balance
	Units	Cost per unit	Amount	Units	Cost per unit	Amount	Units	Cost per unit	Amount
Nov 2	11	$2.15	$23.65				11	$2.15	$23.65
6	2	$2.80	$5.6				11 2	$2.15 $2.80	$29.25
8				2 4	$2.80 $2.15	$14.2	7	$2.15	$15.05
13	3	$2.85	$8.55				7 3	$2.15 $2.85	$23.6
14				3 1	$2.85 $2.15	$10.7	6	$2.15	$12.9