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Chapter 6: Q29PGA_2 (page 367)

Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method.

Short Answer

Expert verified

Total ending inventory under the LIFO method comes out to be $1,315.

Step by step solution

01

Step-by-Step SolutionStep 1: LIFO Method

The LIFO method is just the opposite of the FIFO method. Under this system, the goods issued are valued at the current prices. Thus the issued inventory is valued at the recently purchased cost assuming that the inventories are being issued following the last-in-first-out sequence.

02

Perpetual inventory table under the LIFO method


Purchases
Cost of goods sold
Inventory on hand

Date

Qty

Unit cost

Total Cost

Qty

Unit cost

Total Cost

Qty

Unit Cost

Total Cost

Aug 1

50

$35

$1,750

Aug 3

45

$35

$1,575

5

$35

$175

Aug 8

90

$54

$4,860

5

90

$35

$54

$5,035

Aug 21

85

$54

$4,590

5

5

$35

$54

$445

Jan 26

15

$58

$870

5

5

15

$35

$54

$58

$1,315

Total

105

$5,730

130

$6,165

5

5

15

$35

$54

$58

$1,315

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Most popular questions from this chapter

Clarmont 91影视, which uses the FIFO inventory costing method, has the following account balances at May 31, 2019, prior to releasing the financial statements for the year:

Merchandise Inventory, ending \( 13,500

Cost of Goods Sold 68,000

Net Sales Revenue 123,000

Clarmont has determined that the current replacement cost (current market value) of the May 31, 2019, ending merchandise inventory is \)12,400.

Requirements

1. Prepare any adjusting journal entry required from the information given.

Question:Broadway Communications reported the following figures in its annual financial statements:

Cost of Goods Sold $ 18,400

Beginning Merchandise Inventory 560

Ending Merchandise Inventory 450

Compute the rate of inventory turnover and days鈥� sales in inventory for BroadwayCommunications. (Round to two decimal places.)

Question:Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is \(119. Company records indicate the following for a particular line ofGolf Unlimited鈥檚 putters:

Date Item Quantity Unit Cost

Nov. 1 Balance 24 \) 53

6 Sale 20

8 Purchase 30 70

17 Sale 30

30 Sale 2

Requirements

2. Journalize Golf Unlimited鈥檚 inventory transactions using the weighted-averageinventory costing method. (Assume purchases and sales are made on account.)

Question:This problem continues the Canyon Canoe Company situation from Chapter 5. At the beginning of the January 2019, Canyon Canoe Company decided to carry and sellT-shirts with its logo printed on them. Canyon Canoe Company uses the perpetualinventory system to account for the inventory. During February 2019, Canyon CanoeCompany completed the following merchandising transactions:

Feb. 2 Sold 60 T-shirts at \(10 each.

5 Purchased 50 T-shirts at \)6 each.

7 Sold 45 T-shirts for \(10 each.

8 Sold 20 T-shirts for \)10 each.

10 Canyon Canoe Company realized the inventory was running

low, so it placed a rush order and purchased 20 T-shirts. The

premium cost for these shirts was \(7 each.

12 Placed a second rush order and purchased 40 T-shirts at \)7

each.

13 Sold 20 T-shirts for \(10 each.

15 Purchased 50 T-shirts for \)6 each.

20 In order to avoid future rush orders, purchased 150 T-shirts.

Due to the volume of the order, Canyon Canoe Company

was able to negotiate a cost of \(5 each.

21 Sold 40 T-shirts for \)10 each.

22 Sold 35 T-shirts for \(10 each.

24 Sold 20 T-shirts for \)10 each.

25 Sold 45 T-shirts for \(10 each.

27 Sold 40 T-shirts for \)10 each.

Requirements

2. Provide a summary for the month, in both units and dollars, of the change in inventory in the following format:

Number of T-shirts

Dollar Amount

Beginning Balance

Add: Purchases

Less: Cost of goods sold

Ending Balance

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

Requirements

4. Determine the company鈥檚 cost of goods sold for January using FIFO, LIFO, andweighted-average inventory costing methods.
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