What is the reported cost of ending inventory at the end of January using LIFO, based on the provided purchase and sales data?

To determine the reported cost of ending inventory using the Last-In, First-Out (LIFO) method, it’s essential to understand how LIFO operates. Under LIFO, the most recently purchased inventory items are considered sold first when calculating cost of goods sold. Thus, the ending inventory consists of the oldest inventory.

When assessing inventory in LIFO, follow these steps:

1. List Purchases and Sales: Identify the dates and quantities of purchases and sales throughout January.
2. Calculate Cost of Goods Sold: Determine the cost of the inventory items sold, starting with the latest purchases.
3. Calculate Ending Inventory: Subtract the cost of goods sold from total inventory cost to find the ending inventory value.

If totaling purchases gives a higher value after all sales compared to the selected correct answer of $3,200, it indicates that the ending inventory under LIFO results from the oldest units available in inventory at the time, reflecting a more conservative estimate of the remaining asset value.

In this scenario, if the answer indicated is $3,200, it means that the calculations aligned with LIFO principles, confirming that the oldest purchase costs represent the remaining inventory at the end of the period, thereby accurately reflecting the nature of L