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 relates to its merchandise inventory during the year:

Jan.		1		Inventory on hand—30,000 units; cost $14.10 each.
Feb.		12		Purchased 80,000 units for $14.40 each.
Apr.		30		Sold 50,000 units for $21.90 each.
Jul.		22		Purchased 60,000 units for $14.70 each.
Sep.		9		Sold 80,000 units for $21.90 each.
Nov.		17		Purchased 50,000 units for $15.10 each.
Dec.		31		Inventory on hand—90,000 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.
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 $20,000.

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. (Round "Cost per Unit" to 2 decimal places.)

Perpetual FIFO: Cost of Goods Available for Sale Cost of Goods Sold - April 30 Cost of Goods Sold - September 9 Inventory Balance # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units sold Cost per unit Cost of Goods Sold Total Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beg. Inventory 30,000 $14.10 $423,000 $14.10 $14.10 $0 $14.10 $0 Purchases: February 12 80,000 14.40 1,152,000 14.40 14.40 14.40 0 July 22 60,000 14.70 882,000 14.70 0 14.70 14.70 November 17 50,000 15.10 755,000 15.10 15.10 15.10 Total 220,000 $3,212,000 0 $0 0 $0 $0 0 $0

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.

	LIFO Cost of Goods Available for Sale Cost of Goods Sold - Periodic LIFO Ending Inventory - Periodic LIFO # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beginning Inventory $0.00 $0 $0.00 Purchases: Feb 12 $0.00 $0.00 Jul 22 $0.00 $0.00 Nov 17 $0.00 $0.00 Total 0 $0 0 $0 0 $0

3. Determine the amount Treynor would report for its LIFO reserve at the end of the year.

Life Reserve :

4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $20,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

	Cost of goods available for sale			Cost of goods sold - Apr 30			Cost of goods sold - Sep 9				Inventory balance
Perpetual FIFO	# of units	Cost per unit	Cost of goods available for sale	# of units	Cost per unit	Cost of goods sold	# of units	Cost per unit	Cost of goods sold	Total of Cost of goods sold	# units in ending inventory	Cost per unit	Ending inventory
Beg. Inventory	30000	14.1	423000	30000	14.1	423000
Purchases
Feb 12	80000	14.4	1152000	20000	14.4	288000	60000	14.4	864000
July 22	60000	14.7	882000				20000	14.7	294000		40000	14.7	588000
Nov 17	50000	15.1	755000								50000	15.1	755000
Total	220000		3212000	50000		711000	80000		1158000		90000		1343000

2.

	Cost of goods available for sale			Cost of goods sold - Periodic LIFO			Inventory balance
Periodic LIFO	# of units	Cost per unit	Cost of goods available for sale	# of units	Cost per unit	Cost of goods sold	# units in ending inventory	Cost per unit	Ending inventory
Beg. Inventory	30000	14.1	423000				30000	14.1	423000
Purchases
Feb 12	80000	14.4	1152000	20000	14.4	288000	60000	14.4	864000
July 22	60000	14.7	882000	60000	14.7	882000
Nov 17	50000	15.1	755000	50000	15.1	755000
Total	220000		3212000	130000		1925000	90000		1287000

3. Ending inventory reserve = 1343000 -1287000 = 56000

4.

Account Titles	Debit	Credit
Cost of Goods Sold	36000
LIFO Reserve		36000
[56000-20000]