Question

Tipton Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year:

Jan.		1		Inventory on hand—94,000 units; cost $4.00 each.
Feb.		14		Purchased 106,000 units for $5.00 each.
Mar.		5		Sold 164,000 units for $14.00 each.
Aug.		27		Purchased 64,000 units for $6.00 each.
Sep.		12		Sold 74,000 units for $14.00 each.
Dec.		31		Inventory on hand—26,000 units.

Required:
1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system.
2. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system.
3. Determine the amount Tipton 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 $9,400.

Required 1 Required 2 Required 3 Required 4 Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system. (Round "Cost per Unit" to 2 decimal places.) Perpetual Average Inventory on hand Cost # of Inventory per units unit Value 94,000 $ 4.00 $ 376,000 106,000 $ 5.00 530,000 Ending Cost of Goods Sold Cost of Avg.Cost Goods per unit Sold # of units sold Beginning Inventory Purchase - February 14 Inventory Balance # of units Cost in ending per inventory inventory unit 94,000 $ 4.00 $ 376,000 106,000 $ 5.00 $ 530,000 200,000 $ 906,000 0 % 0 % $ 0 164,000 $ 0.00 Sale - March 5 Purchase - August 27 64,000 $ 6.00 384,000 74,000 $ 0.00 Sale - September 12 Total 264,000 1,290.000 Required 1 Required 2 >

I need revision please help.

Answer 1

Average Method	Inventory on hand			Cost of Goods Sold			Inventory Balance
	Unit	Cost	Value	Unit	Cost	Value	Unit	Cost	Value
Beginning	94000	4	376000				94000	4	376000
Purchase 14-Feb	106000	5	530000				106000	5	530000
							200000	4.53	906000
Sale 5-Mar				164000	4.53	742920	36000	4.53	163080
Purchase 27-Aug	64000	6	384000				64000	6	384000
							100000	5.47	547080
Sale 12-Sep				74000	5.47	404839	26000	5.47	142241

LIFO	Inventory on hand			Cost of Goods Sold			Inventory Balance
	Unit	Cost	Value	Unit	Cost	Value	Unit	Cost	Value
Beginning	94000	4	376000				94000	4	376000
Purchase 14-Feb	106000	5	530000				106000	5	530000
Sale 5-Mar				106000	5	530000
Sale 5-Mar				58000	4	232000
				164000		762000	36000	4	144000
Purchase 27-Aug	64000	6	384000
Sale 12-Sep				64000	6	384000
Sale 12-Sep				10000	4	40000
				74000		424000	26000	4	104000

LIFO Reserve

Difference between different methods of inventory valuation

Inventory closing value as per Average Method									142241
Inventory closing value as per LIFO Method									104000
LIFO Reserve									38241

Opening LIFO Reserve-9400

Reserve need to create

=38241-9400

=28841

Journal Entry

Cost of Goods Sold		Dr	28841
LIFO Reserve		Cr	28841