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Alexandra's Boutique has the following transactions related to its top-selling Gucci purse for the month of October.

Date	Transactions	Units	Unit Cost	Total Cost
October 1	Beginning inventory	6	$ 780	$ 4,680
October 4	Sale	4	 	 
October 10	Purchase	5	790	3,950
October 13	Sale	3	 	 
October 20	Purchase	4	800	3,200
October 28	Sale	7	 	 
October 30	Purchase	6	810	4,860
 	 	 	 	$ 16,690
3. Using LIFO, calculate ending inventory and cost of goods sold at October 31.



To solve this problem using **LIFO (Last In, First Out)**, we follow these steps:

### Key Concepts:
- Under LIFO, the most recently purchased inventory is sold first. Therefore, we begin with the most recent purchases when calculating Cost of Goods Sold (COGS).
- Ending inventory will consist of the oldest inventory units.

### Step 1: Track inventory movements
Let's track the inventory with purchases and sales.

| Date       | Description           | Units Available | Unit Cost | Total Cost |
|------------|-----------------------|-----------------|-----------|------------|
| October 1  | Beginning Inventory    | 6               | $780      | $4,680     |
| October 4  | Sale                   | (4)             | -         | -          |
|            | Remaining after sale   | 2               | $780      | $1,560     |
| October 10 | Purchase               | 5               | $790      | $3,950     |
| October 13 | Sale                   | (3)             | -         | -          |
|            | Remaining after sale   | 2               | $780      | $1,560     |
|            |                        | 2               | $790      | $1,580     |
| October 20 | Purchase               | 4               | $800      | $3,200     |
| October 28 | Sale                   | (7)             | -         | -          |
|            | Remaining after sale   | 1               | $790      | $790       |
| October 30 | Purchase               | 6               | $810      | $4,860     |
|            | Total Inventory        | 7               | -         | $5,650     |

### Step 2: Apply LIFO to determine Cost of Goods Sold (COGS) and Ending Inventory

#### COGS Calculation:

1. **October 4 Sale of 4 units**:
   - Since the last purchase was October 1 (6 units at $780 each), the cost of the 4 units sold is:
     \[
     4 \times 780 = 3,120
     \]
   
2. **October 13 Sale of 3 units**:
   - The most recent purchase was October 10 (5 units at $790). Since we sell 3 units, the cost is:
     \[
     3 \times 790 = 2,370
     \]

3. **October 28 Sale of 7 units**:
   - The most recent purchase was October 20 (4 units at $800). We sell these 4 units first:
     \[
     4 \times 800 = 3,200
     \]
   - We still need to sell 3 more units, so we go back to the October 10 purchase (2 units at $790):
     \[
     2 \times 790 = 1,580
     \]
   - The remaining 1 unit comes from the October 1 purchase (at $780):
     \[
     1 \times 780 = 780
     \]
   - Total for this sale:
     \[
     3,200 + 1,580 + 780 = 5,560
     \]

#### Total COGS:
\[
3,120 + 2,370 + 5,560 = 11,050
\]

### Step 3: Ending Inventory Calculation:
After the October 28 sale, the only remaining inventory comes from the **October 30 purchase** of 6 units at $810 each. Therefore, the ending inventory is:
\[
6 \times 810 = 4,860
\]

### Summary:
- **Ending Inventory** = $4,860
- **Cost of Goods Sold (COGS)** = $11,050

Would you like further clarification on this or any part of the method?

### Related Questions:
1. How would the result change using the FIFO method?
2. What impact does LIFO have on taxes during inflationary periods?
3. How does LIFO affect financial statements compared to FIFO?
4. What are some industries where LIFO is commonly used?
5. What is the weighted average cost method, and how would it apply here?

### Tip: 
In inflationary environments, LIFO typically results in higher COGS, reducing taxable income.

Using LIFO, calculate ending inventory and cost of goods sold at October 31 for the following transactions of Alexandra's Boutique's Gucci purse in October:

Date Transactions Units Unit Cost Total Cost
October 1 Beginning inventory 6 $ 780 $ 4,680
October 4 Sale 4
October 10 Purchase 5 790 3,950
October 13 Sale 3
October 20 Purchase 4 800 3,200
October 28 Sale 7
October 30 Purchase 6 810 4,860
Total Cost: $16,690.

Learn how to calculate the Cost of Goods Sold (COGS) and ending inventory using the LIFO method for Alexandra's Boutique in October. This problem involves basic inventory management concepts and the application of the LIFO method. Suitable for high school and college students studying accounting or finance.

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