To calculate the Cost of Goods Sold (COGS) using the Last-In, First-Out (LIFO) method, we assume the most recent inventory purchases are sold first.

The company sold 100 units in June. Let’s start with the most recent purchases and work our way backward.

Step 1: Identify the purchases

• June 25: 60 units @ $2.20
• June 18: 40 units @ $2.30
• June 11: 20 units @ $2.90
• June 4: 60 units @ $2.20

Step 2: Apply LIFO (Sell most recent inventory first)

We need to account for 100 units sold:

1. June 25 purchase → 60 units @ $2.20 = $132.00
2. June 18 purchase → 40 units @ $2.30 = $92.00

Since we have now accounted for all 100 units, we stop here.

Step 3: Calculate Total COGS

$132.00 + 92.00 = 224.00$

Final Answer:

The Cost of Goods Sold (COGS) using LIFO = $224.00

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Would you like a breakdown with explanations or help with another method?

Here are 5 related questions to explore:

1. How would the First-In, First-Out (FIFO) method affect the COGS?
2. What would be the ending inventory after the sales in June?
3. How does LIFO vs. FIFO impact financial statements?
4. What happens if the company sells more than 100 units in June?
5. How does inflation impact LIFO and FIFO calculations?

Quick Tip:

LIFO typically results in higher COGS and lower taxable income during periods of rising prices, whereas FIFO results in lower COGS and higher reported profits.