Question

To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its merchandise inventory during the year:

Jan.		1		Inventory on hand—28,000 units; cost $13.90 each.
Feb.		12		Purchased 78,000 units for $14.20 each.
Apr.		30		Sold 50,000 units for $21.70 each.
Jul.		22		Purchased 58,000 units for $14.50 each.
Sep.		9		Sold 78,000 units for $21.70 each.
Nov.		17		Purchased 48,000 units for $14.90 each.
Dec.		31		Inventory on hand—84,000 units.

Required:
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system.
2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system.
3. Determine the amount Treynor would report for its LIFO reserve at the end of the year.
4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $18,000.

Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. (Round "Cost per Unit" to 2 decimal places.)

Perpetual FIFO:	Cost of Goods Available for Sale			Cost of Goods Sold - April 30			Cost of Goods Sold - September 9				Inventory Balance
	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost per unit	Cost of Goods Sold	# of units sold	Cost per unit	Cost of Goods Sold	Total Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
Beg. Inventory					$0.00			$0.00	$0			$0.00	$0
Purchases:
February 12					0.00			0.00				0.00	0
July 22					0.00	0		0.00				0.00
November 17					0.00			0.00				0.00
Total	0		$0	0		$0	0		$0	$0	0		$0

Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system.

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost per unit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
Beginning Inventory					$0.00	$0		$0.00
Purchases:
Feb 12					$0.00			$0.00
Jul 22					$0.00			$0.00
Nov 17					$0.00			$0.00
Total	0		$0	0		$0	0		$0

Answer 1

Treynor Corporation
Perpetual FIFO
Date	Cost of Goods available for sale			Cost of Goods sold			Inventory Balance
	No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
Opening	28,000.00	13.90	389,200.00				28,000.00	13.90	389,200.00
Feb. 12	78,000.00	14.20	1,107,600.00				28,000.00	13.90	389,200.00
							78,000.00	14.20	1,107,600.00
Apr. 30				28,000.00	13.90	389,200.00	56,000.00	14.20	795,200.00
				22,000.00	14.20	312,400.00
Jul.22	58,000.00	14.50	841,000.00				56,000.00	14.20	795,200.00
							58,000.00	14.50	841,000.00
Sep.9				56,000.00	14.20	795,200.00	36,000.00	14.50	522,000.00
				22,000.00	14.50	319,000.00
Nov.17	48,000.00	14.90	715,200.00				36,000.00	14.50	522,000.00
							48,000.00	14.90	715,200.00
Balance				128,000.00		1,815,800.00	84,000.00		1,237,200.00
Periodic System
LIFO	Unit	Rate	Amount $
Units sold
Apr. 30	50,000.00
Sep.9	78,000.00
Total sales	128,000.00
Less:
Purchase Nov.17	48,000.00	14.90	715,200.00
Purchase Jul.22	58,000.00	14.50	841,000.00
Purchase Feb.12	22,000.00	14.20	312,400.00
Cost of goods sold	128,000.00		1,868,600.00
Ending Inventory
Purchase Feb.12	56,000.00	14.20	795,200.00
Opening	28,000.00	13.90	389,200.00
Ending Inventory	84,000.00		1,184,400.00