12. What is the company's ending inventory and cost of goods sold for the year ended December 31, 2018, using the periodic last-in, first-out (LIFO) method?
Answer: D
Ending inventory is $61,000, and cost of goods sold is $231,500.
Using the periodic last-in, first-out (LIFO) method, the company's ending inventory for the year ended December 31, 2018, is determined to be $61,000, while the cost of goods sold amounts to $231,500.
A) Ending inventory = $65,000, and cost of goods sold = $227,000
This option is incorrect because the ending inventory figure does not align with the calculations using the LIFO method, which would yield a different cost of goods sold than stated here. The values do not reflect the most recent inventory costs being accounted for as sold.
B) Ending inventory = $65,500, and cost of goods sold = $227,000
This option is also incorrect. The inventory value of $65,500 does not match the calculations required under the LIFO method, leading to a cost of goods sold that fails to accurately reflect the most recent purchases.
C) Ending inventory = $68,500, and cost of goods sold = $224,000
This choice is incorrect as well. The ending inventory of $68,500 exceeds the correct calculation for LIFO, and the cost of goods sold value of $224,000 is lower than what should be reported based on inventory flow assumptions under LIFO.
D) Ending inventory = $61,000, and cost of goods sold = $231,500
This option is correct. It accurately reflects the ending inventory and cost of goods sold as calculated under the periodic LIFO method, where the most recent costs are applied to the goods sold, resulting in the figures stated.
Conclusion
The correct answer is choice D, which provides the accurate ending inventory and cost of goods sold figures for the year ended December 31, 2018, under the periodic LIFO method. The other options fail to meet the criteria established by LIFO calculations, demonstrating an understanding of inventory accounting principles.