Financial Reporting and Analysis Q91

91Mega Games Ltd. started business on January 1, 2012. On January 15, it purchased 1000 games at a cost of $75 each. 900 of these were sold in the first quarter at a price of $100 each. On April 1, more inventory was purchased comprising of 500 games at $80 each. In the second quarter, 550 games were sold. What is the ending inventory most likely to be if the inventory costing method followed is LIFO?

Option : A
Explanation : Under the LIFO method it is assumed that the inventory bought last is sold first. Hence the remaining inventory is valued at the earlier price which is $75. The remaining inventory is 50 and the value is 50 x 75 = $3,750.

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