A company that sells flux capacitors uses LIFO for its inventory accounting. It had 100 flux capacitors in Inventory on 12/31/2011 with a total cost of $100,000. The company bought 50 flux capacitors costing $55,000 on 3/3/12; another 50 flux capacitors costing $65,000 on 6/6/12; and another 100 flux capacitors costing $140,000 on 9/9/12. During 2012, the company sold 150 flux capacitors. What was the balance in Inventory on 12/31/2012?
LIFO is last-in, first-out. For ending inventory, it is FISH, first-in, still-here. So, Ending Inventory will include the costs of the first 150 flux capacitors acquired (the company started with 100, purchased 200, and sold 150, leaving 150 in Ending Inventory). This would be the 100 in Inventory on 12/31/2011 and the 50 bought on 3/3/12: $100,000 + $55,000 = $155,000.
