The following information is for Lattimore Company for Year 2: Beginning inventory200 units @ $108Purchase May 12100 units @ $130Purchase October 9150 units @ $132Sales360 units @ $180Required: Assuming that Lattimore uses the LIFO cost flow method: a) Determine the cost of goods sold during Year 2.b) Determine the inventory balance at the end of Year 2. c) Calculate the average number of days to sell inventory for Year 2.(Round your answer to the nearest day.)
What will be an ideal response?
a) $44,680
b) $9,720
c) 79 days
a) Cost of goods sold = (150 × $132) + (100 × $130) + (110 × $108) = $44,680
b) Ending inventory = 90 × $108 = $9,720
c) Average number of days to sell inventory = 365 ÷ Inventory turnover
Inventory turnover = $44,680 cost of goods sold ÷ $9,720 ending inventory = 4.60
Average number of days to sell inventory = 365 ÷ 4.60 = 79.3 days (rounds to 79 days)
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