To calculate the ending inventory on a LIFO (Last-In, First-Out) basis under the periodic inventory system, we’ll work through the problem step by step:

Step 1: Summarize the inventory transactions

1. Beginning Inventory

   • 40 units @ $110 = $4,400

2. Purchases on July 5

   • 240 units @ $112 = $26,880

3. Purchases on July 21

   • 120 units @ $115 = $13,800

Step 2: Total units available for sale

• Beginning Inventory: 40 units
• Purchases on July 5: 240 units
• Purchases on July 21: 120 units

Total units available for sale = 40 + 240 + 120 = 400 units

Step 3: Units sold during the period

1. Sale on July 14: 160 units
2. Sale on July 30: 150 units

Total units sold = 160 + 150 = 310 units

Step 4: Ending inventory units

Since 400 units were available for sale and 310 units were sold:
Ending inventory = 400 - 310 = 90 units

Step 5: Apply LIFO to determine the ending inventory cost

Under LIFO, the most recent purchases are allocated to Cost of Goods Sold (COGS), and the oldest inventory remains in Ending Inventory.

We have 90 units remaining, and we will pull from the earliest inventory first:

1. From Beginning Inventory (40 units @ $110):

   • 40 units @ $110 = $4,400

2. Next, from July 5 Purchases (remaining 50 units @ $112):

   • 50 units @ $112 = $5,600

Total ending inventory = $4,400 + $5,600 = $10,000

Final Answer: Option b. $10,000

Would you like me to explain how COGS was calculated? Let me know if you have further questions!

Related Questions:

1. How is the ending inventory calculated under FIFO instead of LIFO?
2. What is the Cost of Goods Sold (COGS) under LIFO for this problem?
3. How would the results differ if a perpetual inventory system were used?
4. How is the weighted average cost method applied in this scenario?
5. What impact does LIFO have on financial statements during periods of rising prices?

Tip:

LIFO tends to lower ending inventory values and increase COGS during times of rising prices, which can reduce taxable income.