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To calculate the **Ending Inventory** and **Cost of Goods Sold (COGS)** using the **Last-In, First-Out (LIFO)** method, we need to follow these steps based on the transactions provided.

### Step-by-Step Solution

1. **List the Transactions**: We'll look at the units and costs associated with each purchase and sale.
   - **Beginning Inventory**: 6 units at $840 each
   - **October 4 (Sale)**: 4 units sold
   - **October 10 (Purchase)**: 5 units at $850 each
   - **October 13 (Sale)**: 3 units sold
   - **October 20 (Purchase)**: 4 units at $860 each
   - **October 28 (Sale)**: 7 units sold
   - **October 30 (Purchase)**: 7 units at $870 each

2. **Track Inventory Using LIFO**: Under LIFO, we assume the most recent inventory purchased is sold first.

### Detailed LIFO Calculation

#### Sales Analysis

   - **October 4 Sale (4 units)**:
     - Sold the 4 most recent units from the beginning inventory, which were at $840 each.
     - **COGS** for October 4 sale = 4 * $840 = $3,360

   - **October 13 Sale (3 units)**:
     - After October 4 sale, 2 units from the beginning inventory remain (6 - 4 = 2).
     - October 10 purchase added 5 units at $850.
     - For this sale, we take the 3 most recent units at $850 each.
     - **COGS** for October 13 sale = 3 * $850 = $2,550

   - **October 28 Sale (7 units)**:
     - After previous transactions, we have:
       - 2 units at $840 (from beginning inventory)
       - 2 units at $850 (from October 10)
       - 4 units at $860 (from October 20)
     - For this sale, we take the most recent 7 units:
       - 4 units at $860 = 4 * $860 = $3,440
       - 2 units at $850 = 2 * $850 = $1,700
       - 1 unit at $840 = 1 * $840 = $840
     - **COGS** for October 28 sale = $3,440 + $1,700 + $840 = $5,980

#### Total Cost of Goods Sold (COGS)

   - **COGS** = $3,360 (Oct 4) + $2,550 (Oct 13) + $5,980 (Oct 28) = $11,890

#### Ending Inventory Calculation

   - After all sales, remaining units are:
     - 1 unit at $840 (from beginning inventory)
     - 7 units at $870 (from October 30 purchase)
   - **Ending Inventory** = (1 * $840) + (7 * $870) = $840 + $6,090 = $6,930

### Final Answer

- **Ending Inventory**: $6,930
- **Cost of Goods Sold**: $11,890

Would you like further explanation or details on any part of this calculation?

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#### Follow-up Questions:
1. How would the COGS and ending inventory differ under FIFO (First-In, First-Out)?
2. What impact does LIFO have on taxes during periods of rising prices?
3. Can you explain the impact of LIFO on financial ratios?
4. What is the difference between periodic and perpetual inventory systems in LIFO?
5. Why might a company choose LIFO over other inventory methods?

#### Tip:
Remember that under LIFO, the latest inventory costs are used first, which can help lower taxable income during times of inflation by increasing the COGS.

Using LIFO, calculate ending inventory and cost of goods sold at October 31 for Sara's Boutique.

Calculate the ending inventory and cost of goods sold for Sara's Boutique using the LIFO (Last-In, First-Out) method. This example involves October transactions, covering inventory valuation and cost accounting principles. Suitable for undergraduate business or accounting students.

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