Hello,

Please review the work I did, and not sure if it is correct, as I am not quite sure how to determine or disregarding income tax, and determine the LIFO liquidation profit or loss, if any, for 2021 and 2022. Please help and explain.

Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2021 with $85,000 in inventory of its only product. The beginning inventory consisted of the following layers:

5,300 units at $6 per unit	$	31,800
7,600 units at $7 per unit		53,200
Total	$	85,000

During 2021, 7,300 units were purchased at $8 per unit and during 2022, 9,600 units were purchased at $9 per unit. Sales, in units, were 9,600 and 17,200 during 2021 and 2022, respectively.

Required:

1. Calculate the cost of goods sold for 2021 and 2022.

2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2021 and 2022.

My calculation:

In 2021:

Cost of goods sold = (7300 Units * $8) + (2300 units * $7)

= $74,500

In 2022 :

Cost of goods sold = (9600 units * $9) + (5300 units *$7) + (2300 units * $6)

= $137,300