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To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out...

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—20,000 units; cost $12.20 each.
Feb. 12 Purchased 70,000 units for $12.50 each.
Apr. 30 Sold 50,000 units for $20.00 each.
Jul. 22 Purchased 50,000 units for $12.80 each.
Sep. 9 Sold 70,000 units for $20.00 each.
Nov. 17 Purchased 40,000 units for $13.20 each.
Dec. 31 Inventory on hand—60,000 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. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70).
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 $10,000.

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 20,000 $12.20 $244,000 0 $12.20 $12.20 $0 0 $12.20 $0
Purchases:
February 12 70,000 12.50 875,000 0 12.50 0 12.50 0 12.50 0
July 22 50,000 12.80 640,000 0 12.80 0 0 12.80 0 12.80
November 17 40,000 13.20 528,000 0 13.20 0 13.20 13.20
Total 180,000 $2,287,000 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. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70).

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 20,000 $11.70 $234,000 $11.70 $0 $11.70
Purchases:
Feb 12 70,000 $12.50 875,000 $12.50 $12.50
Jul 22 50,000 $12.80 640,000 $12.80 $12.80
Nov 17 40,000 $13.20 528,000 $13.20 $13.20
Total 180,000 $2,277,000 0 $0 0 $0

Determine the amount Treynor would report for its LIFO reserve at the end of the year.

LIFO Reserve

Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $10,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

  • Record the year-end adjusting entry for the LIFO reserve.

Note: Enter debits before credits.

Transaction General Journal Debit Credit
1

Solutions

Expert Solution

1.

FIFO Cost of Goods Available for Sale Cost of Goods Sold-Apr. 30 Cost of Goods Sold-Sep. 9 Inventory on hand
Activity Units Unit Price Amount Units Unit Price Amount Units Unit Price Amount Units Unit Price Amount
Beginning Inventory 20000 $             12.20 $     244,000 20000 $            12.20 $        244,000
Purchases
Feb. 12 70000 $             12.50 $     875,000 30000 $            12.50 $        375,000 40000 $            12.50 $        500,000
Jul. 22 50000 $             12.80 $     640,000 30000 $            12.80 $        384,000 20000 $            12.80 $      256,000
Nov. 17 40000 $             13.20 $     528,000 40000 $            13.20 $      528,000
Total 180000 $ 2,287,000 50000 $       619,000 70000 $       884,000 60000 $     784,000

2.

LIFO Cost of Goods Available for Sale Cost of Goods Sold Ending Inventory
Activity Units Unit Price Amount Units Unit Price Amount Units Unit Price Amount
Beginning Inventory 20000 $             11.70 $     234,000 20000 $            11.70 $        234,000
Purchases
Feb. 12 70000 $             12.50 $     875,000 30000 $            12.50 $        375,000 40000 $            12.50 $        500,000
Jul. 22 50000 $             12.80 $     640,000 50000 $            12.80 $        640,000
Nov. 17 40000 $             13.20 $     528,000 40000 $            13.20 $        528,000
Total 180000 $ 2,277,000 120000 $    1,543,000 60000 $       734,000

3.
LIFO Reserve at end of year = $784000-734000 = $50000

4.

Account Titles Debit Credit
LIFO Reserve $          40,000
       Cost of Goods Sold $          40,000

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