Question

Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete’s Tennis Shop uses a periodic inventory system.

Date			Transactions	Units	Unit Cost					Total Cost
August	1		Beginning inventory	8		$	141				$	1,128
August	4		Sale ($130 each)	5
August	11		Purchase	10			131					1,310
August	13		Sale ($145 each)	8
August	20		Purchase	10			121					1,210
August	26		Sale ($155 each)	11
August	29		Purchase	11			111					1,221
											$	4,869

For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.

7. If Pete’s chooses to report inventory using LIFO, record the LIFO journal entry adjustment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

"No Journal Entry Required"

No entry is needed because inventory is reported using LIFO ‘no entry’ is needed.

LIFO reserve will be computed as follows: -

FIFO Inventory cost – LIFO inventory cost