Question

Esquire Inc. uses the LIFO method to report its inventory. Inventory at January 1, 2021, was $780,000 (39,000 units at $20 each). During 2021, 118,000 units were purchased, all at the same price of $29 per unit. 121,000 units were sold during 2021. 

Calculate the December 31, 2021, ending Inventory and cost of goods sold for 2021 based on a periodic inventory system.

On December 28, 2021, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar Communications for $26,000 each. The terms of each sale were 2/10, n/30. VTC uses the net method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2022. 

Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Particular	unit	per unit cost	total
Beginninginventory	39,000	20	780,000
Purchase	118,000	29	3,422,000
Cost of goods available for sale	157,000		4,202,000
Cost of goods sold:
Purchase	118,000	29	3,422,000
Beginning inventory	3,000	20	60,000
Cost of goods sold	121,000		3,482,000
Ending inventory	36,000		720,000