Computing LIFO and journalizing inventory transactions (Learning Objectives 1 & 2) 15–20 min.

Watkins Equipment sells hand-held engine analyzers to automotive service shops.

Watkins Equipment started April with an inventory of 140 units that cost a total of

$22,120. During the month, Watkins Equipment purchased and sold merchandise on account as follows:

Apr 6 13 19 25 29 Purchased 60 units @ $160 Sold 50 units @ $310 Purchased 80 units @ $162 Sold 60 units @ $310 Sold 110 units @ $310 Watkins Equipment uses the LIFO method. Cash payments on account totaled $18,400.

Operating expenses for the month were $16,200, with two-thirds paid in cash and the rest accrued as Accounts Payable.

Requirements 1. Which inventory method (excluding specific-unit) most likely mimics the physical flow of Watkins Equipment’s inventory?

2. Prepare a perpetual inventory record, using LIFO cost, for this merchandise.

3. Journalize all transactions using LIFO. Record the payments on account and the operating expenses on April 30.

AppendixLO1