Assume the following events for a month for Company X:

Beginning Balance of Inventory is 400 Units and the cost is $200 per Unit.

October 5 Company X purchases 400 Units at a cost of $220 per Unit.

October 9 Company X sells 600 units for $500 per Unit.

October 17 Company X purchases 200 Units at a cost of $230 per Unit.

October 27 Company X sells 300 units for $500 per Unit.

October 29 Company X purchases 200 units for $250 per Unit.

Use this data to answer all questions.  Using LIFO Perpetual, what is the COGS for October?





To calculate the Cost of Goods Sold (COGS) for October under the **LIFO (Last-In, First-Out) Perpetual** inventory system, we'll go through the transactions step by step. In LIFO perpetual, we assume that the most recent purchases are sold first for each transaction.

### Beginning Inventory:
- **400 units @ $200 per unit** = $80,000

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### **October 5** Purchase:
- Purchased **400 units @ $220 per unit**  
- Total cost = 400 × $220 = $88,000

Inventory after purchase:
- **400 units @ $200** 
- **400 units @ $220**

---

### **October 9** Sale of 600 units:
- Under LIFO, the **most recent** purchase (400 units @ $220) will be sold first, followed by 200 units from the earlier stock (400 units @ $200).
- **400 units @ $220** = $88,000
- **200 units @ $200** = $40,000

Total COGS for October 9 sale:
- COGS = $88,000 + $40,000 = **$128,000**

Remaining inventory after sale:
- 200 units @ $200

---

### **October 17** Purchase:
- Purchased **200 units @ $230 per unit**
- Total cost = 200 × $230 = $46,000

Inventory after purchase:
- **200 units @ $200**
- **200 units @ $230**

---

### **October 27** Sale of 300 units:
- Under LIFO, the **most recent** purchase (200 units @ $230) will be sold first, followed by 100 units from the earlier stock (200 units @ $200).
- **200 units @ $230** = $46,000
- **100 units @ $200** = $20,000

Total COGS for October 27 sale:
- COGS = $46,000 + $20,000 = **$66,000**

Remaining inventory after sale:
- **100 units @ $200**

---

### **October 29** Purchase:
- Purchased **200 units @ $250 per unit**
- Total cost = 200 × $250 = $50,000

Inventory after purchase:
- **100 units @ $200**
- **200 units @ $250**

---

### Total COGS for October:
- COGS for October 9 sale = $128,000
- COGS for October 27 sale = $66,000

Total COGS = $128,000 + $66,000 = **$194,000**

### Final Answer:
The total **COGS for October** under the **LIFO Perpetual** system is **$194,000**.

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Would you like any details or have questions about these calculations?

Here are 5 related questions to expand on this:

1. How would the COGS change if we used FIFO (First-In, First-Out) instead of LIFO?
2. What would be the ending inventory value under the LIFO method?
3. How would the gross profit for October be calculated based on the sales and COGS?
4. How does a perpetual inventory system differ from a periodic one in terms of COGS calculation?
5. What impact does the choice between LIFO and FIFO have on taxes and financial reporting?

**Tip:** When using LIFO, COGS tends to be higher during periods of rising prices, which can lower taxable income.

Assume the following events for a month for Company X:

Beginning Balance of Inventory is 400 Units and the cost is $200 per Unit.

October 5 Company X purchases 400 Units at a cost of $220 per Unit.

October 9 Company X sells 600 units for $500 per Unit.

October 17 Company X purchases 200 Units at a cost of $230 per Unit.

October 27 Company X sells 300 units for $500 per Unit.

October 29 Company X purchases 200 units for $250 per Unit.

Using LIFO Perpetual, what is the COGS for October?

Calculate the Cost of Goods Sold (COGS) for Company X using the LIFO Perpetual inventory system for October. Analyze transactions including purchases, sales, and inventory, and learn how to apply LIFO for accurate accounting. Ideal for college-level business and accounting students.

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