Ch5. Video 8 - LIFO Example

The video tutorial explains the LIFO method using the Delta Company example. It begins with a setup similar to previous videos and focuses on calculating the cost of goods sold (COGS) using the LIFO method. The instructor details the process of expensing 29 units, starting with the most recent purchase, and completes the journal entry. The video concludes with calculating gross profit and ending inventory, providing a comprehensive understanding of the LIFO method.

What is the primary principle of the LIFO method?

• First purchase is the first to be expensed

• Last purchase is the first to be expensed

• Average cost is used for expensing

• Random selection of units for expensing

How many units were expensed from the October 10th purchase?

• 7 units

• 22 units

• 16 units

• 29 units

What is the total cost of goods sold calculated using the LIFO method?

• $660

• $849

• $468

• $601

How is gross profit determined in this example?

• COGS minus sales revenue

• Sales revenue minus ending inventory

• Ending inventory minus COGS

• Sales revenue minus COGS

What is the value of the ending inventory?

• $468

• $225

• $243

• $849