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Chapter 6: Q34PGB_2 (page 370)

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

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

Short Answer

Expert verified

Total ending inventory under the LIFO method comes out to be $1,160.

Step by step solution

01

LIFO Method

The LIFO method is just the opposite of the FIFO method. This method follows the last in first out sequence to value issued goods. Thus the issued inventory is valued at the recently purchased cost, assuming that the inventories would have been issued following the last-in-first-out sequence.

02

Perpetual inventory table under the LIFO method

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Most popular questions from this chapter

Question:Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing method that averages cost changes.

Requirements

1. Which inventory costing method would best meet Ward鈥檚 goal?

2. Assume Ward wanted to expense out the newer purchases of goods instead.

Which inventory costing method would best meet that need?

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:Boston Cycles started October with 12 bicycles that cost \(42 each. On October 16, Boston bought 40 bicycles at \)68 each. On October 31, Boston sold 34 bicycles for$100 each.

Preparing a perpetual inventory record and journal entries鈥擣IFO

Requirements

1. Prepare Boston Cycle鈥檚 perpetual inventory record assuming the company uses theFIFO inventory costing method.

What does the lower-of-cost-or-market (LCM) rule require?

Some of L and K Electronics鈥檚 merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is\(32,000 below the business鈥檚 cost of the goods, which was \)98,000. Before any adjustmentsat the end of the period, the company鈥檚 Cost of Goods Sold account has a balanceof $410,000.

Requirements

1. Journalize any required entries.
See all solutions

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