Question

Daytona Sales, which uses periodic inventory, has a beginning balance in men’s shirts of 14 at $15.00 each. Daytona Sales purchases men’s shirts in the order of:

Mar 7th, 24 shirts at $15.10 each,

Mar 12th, 24 shirts at $15.50 each,

Mar 18th, 24 shirts at $16.00 each, and

Mar 24th, 24 shirts at $16.25 each.

Daytona’s sales are in the order of:

For the week ending March 7th, 6 at $30.00,

For the week ending March 14th, 15 at $30.00,

For the week ending March 21st, 12 at $30.00,

For the week ending March 28th, 14 at $25.00, an

For the partial week ending March 31st, 6 at $30.00.

All indicated figures are exclusive of GST.

Required:

For the month of March, compute the cost of goods sold using LIFO and journalize that value as of January 31st.

Answer 1

Solution:
Cost of goods sold using LIFO Periodic inventory on 31 st march
Ending inventory units = Beginning inventory units + Purchases - Unit sold
= 14 + 96 - 53 = 57 units
Ending inventory =   14 * $15 + 24 *$15.10 + 19 * $15.50 = $866.90
Cost of goods sold = Cost of goods available for sale - Ending inventory
= (14 * $15 + 24 * $15.10 + 24 *$15.50 + 24 *$16 + 24*$16.25 ) - $866.90
= $1,718.40 - $866.90
= $851.50
Journal entry
Date	Accounts title and explanations	Debit	Credit
March , 31	Cost of goods sold	$851.50
	Inventory		$851.50
	(Being cost of goods sold for the month of march)
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