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-21,800 units; cost $13.20 each. Feb. 12 Purchased 71,eee units for $13.50 each. Apr. 30 Sold 50,eee units for $21.ee each. Jul. 22 Purchased 51,000 units for $13.8e each. Sep. 9 Sold 71,089 units for $21.ee each. Nov. 17 Purchased 41,eee units for $14.20 each. Dec. 31 Inventory on hand-63,800 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 21,000 units with a cost of $12.70). 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 $11.000.

Answer 1

Cost of goods avalable for sale Cost per unit Cost of goods available for sale 13.20 $ 277,200 Cost of Goods sold April 30 Cost of Goods sold Sept 9 Inventory Balance NO of Units Cost per unit Cost of goods sold NO of Units Cost per unit Cost of goods sold NO of Units Cost per unit Ending Inventory 21000 $ 13.20 $ 277,200 0 $ 13.20 $ 0 $ 13.20 $ 21000 $ Requirement 1) Perpetual FIFO NO of Units Beginning Inventory Purchases 12-Feb 22-Jul 17-Nov Total 391,500 - 71000 $ 51000 $ 41000 $ 184000 13.50 $ 13.80 $ 14.20 $ $ 958,500 703,800 582,200 2,521,700 29000 $ 0 $ 0 $ 50000 13.50 $ 13.80 $ 14.20 $ $ 42000 $ 29000 $ $ 71000 13.50 $ 13.80 $ 14.20 $ $ 567,000 400,200 0 $ 22000 $ 41000 $ 63000 13.50 $ 13.80 $ 14.20 $ $ 303,600 582,200 885,800 668,700 967,200 Cost of goods avalable for sale Cost per unit Cost of goods available for sale 21000 $ 12.70 $ 266,700 Cost of Goods sold-Periodic ifo NO of Units Cost per unit Cost of goods sold 0 $ 12.70 $ Inventory Balance NO of Units Cost per unit Ending Inventory 21000 $ 12.70 $ 266,700 Requirement (2) Periodic LIFO NO of Units Beginning Inventory Purchases 12-Feb 22-Jul 17-Nov Total 567,000 71000 $ 51000 $ 41000 $ 184000 13.50 $ 13.80 $ 14.20 $ $ 958,500 703,800 582,200 2,511,200 29000 $ 51000 $ 41000 $ 121000 13.50 $ 13.80 $ 14.20 $ $ 391,500 703,800 582,200 1,677,500 42000 $ 0$ 0 $ 63000 13.50 $ 13.80 $ 14.20 $ $ 833,700 Requirement (3) LIFO Reserve (885800-833700) $ 52,100 Requirement (4) Event Credit General Journal 1 Cost of goods sold LIFO Reserve Debit $ $ 41,100 $ 41,100 (To record adjusting entry) Note : Comment down for any issues