In: Accounting
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.)
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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).
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Determine the amount Treynor would report for its LIFO reserve at the end of the year.
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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
Note: Enter debits before credits.
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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 |