1. The problem is to explain the Last In, First Out (LIFO) method in inventory accounting. 2. In LIFO, the last items added to inventory are the first ones to be used or sold. 3. Suppose a company buys stock in batches: first 100 units at price $10 each and then 200 units at price $12 each. 4. If the company sells 150 units, under LIFO, we assume the 150 units sold are from the latest purchase (200 units at $12 each). 5. Calculate the cost of goods sold (COGS) under LIFO as: $$ ext{COGS} = 150 \times 12 = 1800$$ 6. Remaining inventory will be: $$\text{Remaining} = 100 \times 10 + (200 - 150) \times 12 = 1000 + 600 = 1600$$ 7. LIFO assumes selling most recent inventory first to calculate inventory and COGS. 8. This method affects financial and tax reporting when prices fluctuate.