The MegaMart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit.
Question:
The MegaMart Company began 2024 with inventory of 10,000 units at a cost of $7 per unit. During 2024, 50,000 units were purchased for $8.50 each. Sales for the year totaled 54,000 units leaving 6,000 units on hand at the end of 2024. MegaMart uses a periodic inventory system and the LIFO inventory cost method.
Required:
1. Calculate cost of goods sold for 2024.
2. From a financial reporting perspective, what problem is created by the use of LIFO in this situation? Describe the disclosure required to report the effects of this problem.
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Requirement 1 Cost of goods sold 50000 units 850 425000 4000 ...View the full answer
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