Question
To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information
To more efficiently manage its inventory, Treynor Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its merchandise inventory during the year:
Jan. | 1 | Inventory on hand20,000 units; cost $12.20 each. | ||
Feb. | 12 | Purchased 70,000 units for $12.50 each. | ||
Apr. | 30 | Sold 50,000 units for $20.00 each. | ||
Jul. | 22 | Purchased 50,000 units for $12.80 each. | ||
Sep. | 9 | Sold 70,000 units for $20.00 each. | ||
Nov. | 17 | Purchased 40,000 units for $13.20 each. | ||
Dec. | 31 | Inventory on hand60,000 units. |
Required: 1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. 2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 20,000 units with a cost of $11.70). 3. Determine the amount Treynor 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 $10,000.
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