CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

SportsTrader began operations on January 1, 2011. It has been using LIFO since then for inventory accounting. The following stock record card for footballs was taken from the records at the end of year.

  • 01/01 Beginning inventory 10 units, at $20 each, total $200
  • 05/09 30 footballs purchased, at $22 each, total $660
  • 08/08 15 footballs purchased, at $25 each, total $375
  • 12/31 Ending inventory: 25 footballs

What is the value of the inventory at the end of year?

A. $530
B. $640
C. $595
Correct Answer: A

10 x 20 + 15 x 22 = $530

User Contributed Comments 10

User Comment
Bibhu since its LIFO, we should check the dates. Since 25 remaining, last 15 are sold along with 15 purchased on 05/09/2011.
olukayode yes, in Lifo, EI equals oldest prices and since only 10 was bought initially the remaining 15 will be in the next old price
johntan1979 Correction: It should be lowest prices, not oldest prices.

Oldest doesn't necessarily mean lowest.
Bududeen johntan1979 be careful...its oldest prices...its just a coincidence that, here the oldest prices are also the lowest prices...in situations wherein the prices fluctuate or decline then u may get it all wrong
schweitzdm I could use some clarification on this one. I thought the answer was C.
robbiecow Under the periodic system above you must calculate the ending inventory based on what is physically left in the "stock room." Since you are using LIFO; this means you are selling the last thing that you made or purchased. In the above question that would be 15 units @ $25 and 10 units @ $22. This will equal your COGS. Now calculate what is left, or ending inventory. (30 purchased @ $22 less the 15 you sold) plus the 10 units that you started with @ $20.

Hope that helps
farhan92 not enough information given..are these footballs or american footballs?
vfelix26 Lmao... farhan92
choas69 make funny jokes like these then you will become zalaan not farhaan.
pigletin asking for the end inventory value, not the COGS.
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