To solve this problem, we will use the LIFO (Last-In, First-Out) inventory method to compute the following:

1. Cost of Goods Available for Sale (COGAS)
2. Cost of Ending Inventory
3. Cost of Goods Sold (COGS)

Here's the step-by-step approach:

1. Calculate Cost of Goods Available for Sale (COGAS)

First, calculate the total units and cost of all purchases made throughout the year, including the beginning inventory.

$\text{COGAS} = \text{Beginning Inventory} + \text{Purchases during the year}$

Transaction	Units	Unit Cost	Total Cost
Beginning Inventory	220	$26	220 × 26 = $5,720
Purchase on March 2	310	$28	310 × 28 = $8,680
Purchase on June 30	270	$32	270 × 32 = $8,640

$\text{Total Units} = 220 + 310 + 270 = 800 \text{ units}$ $\text{COGAS (Total Cost)} = 5,720 + 8,680 + 8,640 = \$23,040$

2. Cost of Ending Inventory

Using the LIFO method, we assume the most recent purchases are sold first. Therefore, the units remaining in the ending inventory come from the oldest purchases.

Total units sold:

The number of units sold during the year is: $\text{Units sold} = 370 \text{ (April 1)} + 90 \text{ (August 1)} = 460 \text{ units}$

Units in ending inventory: $\text{Ending inventory units} = 800 \text{ (total units)} - 460 \text{ (units sold)} = 340 \text{ units}$

The ending inventory consists of the oldest units (starting with the beginning inventory and then any remaining units from the earlier purchases).

• 220 units from the Beginning Inventory at $26 each
• The remaining 120 units (340 - 220) from the March 2 purchase at $28 each

$\text{Ending Inventory Cost} = (220 \times 26) + (120 \times 28)$ $= 5,720 + 3,360 = \$9,080$

3. Cost of Goods Sold (COGS)

Now, we calculate the COGS by subtracting the ending inventory cost from the total cost of goods available for sale.

$\text{COGS} = \text{COGAS} - \text{Ending Inventory Cost}$ $\text{COGS} = 23,040 - 9,080 = \$13,960$

Summary:

1. Cost of Goods Available for Sale (COGAS): $23,040
2. Cost of Ending Inventory: $9,080
3. Cost of Goods Sold (COGS): $13,960

Would you like a more detailed breakdown of any part? Let me know if you have any questions!

Here are some related questions:

1. How would the results differ using the FIFO method?
2. What impact does the LIFO method have on taxes during periods of rising prices?
3. Can LIFO or FIFO methods affect the company's profitability ratios?
4. How would the valuation change if the company sold more units?
5. What if the unit costs were to fluctuate more throughout the year?

Tip: In times of inflation, LIFO typically results in higher COGS and lower ending inventory, reducing taxable income.