Question
LIFO liquidation in an interim reporting period Assume that our records include the following two LIFO inventory cost pools: Units Cost/Unit BOQ 600 $20 Purchase
LIFO liquidation in an interim reporting period Assume that our records include the following two LIFO inventory cost pools:
|
| Units | Cost/Unit |
|---|---|---|
| BOQ | 600 | $20 |
| Purchase #1 | 800 | $30 |
|
| 1,400 |
|
At the beginning of the quarter (BOQ), we report 600 units on hand at a cost of $20 per unit. During the quarter, we sell 1,000 units at $60/unit for cash. Assume that we expect to increase our quantities of inventories on hand by year-end by the purchase of inventories at a cost of $40.
a. Compute the gross profit we should recognize on the sales during the quarter.
Gross Profit $Answer
b. Prepare the required journal entries to record the sales.
| General Journal | ||
|---|---|---|
| Description | Debit | Credit |
| Answer | Answer | Answer |
| Answer | Answer | Answer |
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|
|
|
| Answer | Answer | Answer |
| Inventory | Answer | Answer |
| Answer | Answer | Answer |
c. What adjusting entry will be required at year-end if the planned replacement of the inventories does not occur?
| General Journal | ||
|---|---|---|
| Description | Debit | Credit |
| Answer | Answer | Answer |
| Answer | Answer | Answer |
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