Question

Blossom Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting purposes. At January 1, 2020, the LIFO reserve has a credit balance of $1,387.700. At December 31, 2020, Blossom's internal reports indicated that the FIFO inventory balance was $2.875,500 and for external reporting purposes the LIFO inventory balance was $1,390,400. (a) What is the amount of the LIFO reserve and the LIFO effect related to 2020? LIFO reserve at December 31, 2020 $ LIFO effect for 2020

Answer 1

solution

1.

Blossom Company:

a.

LIFO Reserve at Dec 31, 2020	$ 1,485,100
LIFO effect for 2020	$ 97,400

calculation:

LIFO Reserve at Dec 31, 2020:

	FIFO Inventory Balance on Dec 31 ,2020	$ 2,875,500
Less:	LIFO Inventory Balance on Dec 31 ,2020	$ 1,390,400
	Answer	$ 1,485,100

LIFO effect for 2020

	LIFO Inventory Balance on Dec 31 ,2020	$ 1,485,100
Less:	LIFO Inventory Balance on Jan 1 ,2020	$ 1,387,700
	Answer	$ 97,400

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2.

Marigold Company

Ending Inventory	$ 7,980
Cost of Goods Sold	$ 8,600

Calculation:

	Purchases			Cost of Goods Sold			Ending Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr-01							250	14	3500
Apr-15	420	17	7140				250	14	3500
							420	17	7140
Apr-23	330	18	5940				250	14	3500
							420	17	7140
							330	18	5940
Apr-30				250	14	3500	120	17	2040
				300	17	5100	330	18	5940
	750		13080	550		8600	450		7980

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