Q7TI-b Serenity Books has the following... [FREE SOLUTION]

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Chapter 6: Q7TI-b (page 350)

Serenity Books has the following transactions in August related to merchandise inventory.
Aug. 1 Beginning merchandise inventory, 10 books @ $15 each
3 Sold 3 books @ $20 each
12 Purchased 8 books @ $18 each
15 Sold 9 books @ $20 each
20 Purchased 4 books @ $20 each
28 Sold 5 books @ $25 each
b. Determine the cost of goods sold and ending merchandise inventory using the LIFO inventory costing method assuming Serenity Books uses the periodic inventory system.

Short Answer

Expert verified

Ending Inventory: $98

Cost of goods sold: $276

Step by step solution

Ending inventory using LIFO periodic inventory

Using LIFO, the ending inventory would be valued at historic prices.

\begin{matrix} E n d i n g I n v e n t o r y (U n i t s) = B e g i n n i n g I n v e n t o r y (u n i t s) + T o t a l P u r c h a s e s (U n i t s) - T o t a l S a l e s (u n i t s) \\ = 10 + (8 + 4) - (3 + 9 + 5) \\ = 10 + 12 - 17 \\ = 5 \end{matrix}

$\begin{matrix} E n d i n g I n v e n t o r y (V a l u e) = B e g i n n i n g I n v e n t o r y v a l u e f o r 5 b o o k s \\ = 5 脳 $ 15 \\ = $ 75 \end{matrix}$

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	2019	2018	2017
Net Sales Revenue	\( 220,000	\) 162,000	\( 176,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(29,000	\)46,000
Net cost of purchase	132,000	90,000	76,000
Cost of goods available for sale	154,000	119,000	122,000
Less: Ending Merchandise Inventory	32,000	22,000	29,000
Cost of goods sold	122,000	97,000	93,000
Gross Profit	98,000	65,000	83,000
Operating Expenses	72,000	38,000	48,000
Net Income	\( 26,000	\) 27,000	$ 35,000

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Short Answer

Step by step solution

Ending inventory using LIFO periodic inventory

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