Refer to the data for Inland Equipment in P5-40A. However, assume Inland Equipment uses the average cost
Question:
Refer to the data for Inland Equipment in P5-40A. However, assume Inland Equipment uses the average cost method.
Requirements 1. Prepare a perpetual inventory record using average cost. Round the average unit cost to the nearest cent and all other amounts to the nearest dollar.
2. Prepare a multi-step income statement for Inland Equipment for the month of April.
5-40
Inland Equipment sells hand held engine analyzers to automotive service shops. Inland Equipment started April with an inventory of 85 units that cost a total of \($12,750.\) During the month, Inland Equipment purchased and sold merchandise on account as follows:
Inland Equipment uses the LIFO method. Cash payments on account totaled \($21,700.\) Operating expenses for the month were \($12,000,\) 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 Inland 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 the 30th.
Step by Step Answer:
