Question

record the LIFO adjustment

Ine TONOWY WUNDUNT UPP Pete's Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete's Tennis Shop uses a periodic Inventory system. Units Date August 1 Unit Cost $147 Total Cost $ 1,176 137 1,370 August 4 August 11 August 13 August 20 August 26 August 29 Transactions Beginning inventory Sale ($160 each) Purchase Sale ($175 each) Purchase Sale ($185 each) Purchase 127 1,270 217 1,287 5.103 For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase. Problem 6-2B Part 7 7. 1 Pete's chooses to report inventory using LIFO, record the LIFO adjustment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 1 Record the LIFO adjustment. Note: Enter debits before credits Date General Journal Debit Credit August 31 Record entry Clear entry View general journal

Answer 1

10 Transaction Beginning inventory sale on Aug 4 Balance on Aug 4 Purchase on Aug 11 Sales on Aug 13 Balance on Aug 13 Purchase on Aug 20 Balance on Aug 20 sale on Aug 26 Balance on Aug 26 Purchases as on Aug 29 Balance on Aug 29 Valuation for stock using FIFO No of Unit Unit Price Total Value 8 147 1176 147 735 147 441 137 1370 (3*147 +5*137) 1126 137 685 127 1270 (5*137 + 10 *127) 1955 11 (5 * 137 +6* 127) 1447 127 635 117 1287 (5*127 + 11* 117) 1922 10

LM00 Transaction Beginning inventory sale on Aug 4 Balance on Aug 4 Purchase on Aug 11 Sales on Aug 13 Balance on Aug 13 Purchase on Aug 20 Balance on Aug 20 sale on Aug 26 Balance on Aug 26 Purchases as on Aug 29 Balance on Aug 29 Valuation for stock using Lifo No of Unit Unit Price Total Value 147 1176 147 735 147 441 137 1370 137 1096 (2*137 + 3*147) 715 127 1270 (2*137 +3*147 + 10*127)) 1985 (10 * 127 + 1* 137)| 1407 (3*147+1* 137) 578 117 1287 16 (3*147+1*137 + 11*117) 1865

The above calculation shows that valuation of closing stock as per FIFO is $1922 where as using LIFO is $1865, the adjustment required is

=$1922 -$1865 = $57.00

The closing stock of inventory of $57 needs to be transferred to cost of goods sold as it is been already sold.

Date	Account Title	Debit $	Credit $
Aug 31	Cost of Goods Sold	$57.00
	Inventory		$57.00