Beginning inventory, purchases, and sales for Item Foxtrot are as follows: Mar. 1 Inventory 270 units at $18 8 Sale 225 units 15 Purchase 375 units at $20 27 Sale 240 units Assuming a perpetual inventory system and using the last-in, first-out (LIFO) method, determine (a) the cost of merchandise sold on March 27 and (b) the inventory on

(a) the cost of merchandise sold on March 27 is $4,800.

(b) Inventory on March 31 is $3,510

Explanation:

Note: This question is not complete and the data in need are merged together. The complete question with the sorted data is therefore provided before answering the question. See the attached pdf file for the complete question with the sorted data.

The explanation to the answer is now given as follows:

(a) Determine the cost of merchandise sold on March 27

Under the last-in, first-out (LIFO) method, the last purchased items are issued first and the cost of goods sold are calculated using the cost of the last purchased item.

Therefore, the cost of merchandise sold on March 27 can be calculated as follows:

Cost of last purchased item before March 27 = $20

Units of sale on March 27 = 240

Cost of merchandise sold on March 27 = Cost of last purchased item before March 27 * Units of sale on March 27 = $20 * 240 = $4,800

Therefore, the cost of merchandise sold on March 27 is $4,800.

(b) Determine the inventory on March 31.

As already stated in part (a), the last purchased items are issued first under the last-in, first-out (LIFO).

Therefore, the inventory on March 31 can be determined as follows:

Units of March 1 purchase outstanding after March 8 sales = Units purchased on March 1 - Units sold on March 8 = 270 – 225 = 45

Cost of units of March 1 purchase outstanding after March 8 sales = Units of March 1 purchase outstanding after March 8 sales * Cost per unit of March 1 purchase = 45 * $18 = $810

Units of March 15 purchase outstanding after March 27 sales = Units purchased on March 15 - Units sold on March 27 = 375 – 240 = 135

Cost of units of March 15 purchase outstanding after March 27 sales = Units of March 15 purchase outstanding after March 27 sales * Cost per unit of March 27 purchase = 135 * $20 = $2,700

Therefore, we have:

Inventory on March 31 = Cost of units of March 1 purchase outstanding after March 8 sales + Cost of units of March 15 purchase outstanding after March 27 sales = $810 + $2,700 = $3,510

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