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 Feb. 12 Jul. 22 Sep. 9 Nov. 17 Dec. 31 Inventory on hand-20,000 units; cost $12.20 each. Purchased 70,000 units for $12.50 each. Sold 50,000 units for $20.00 each. Purchased 50,000 units for $12.80 each. Sold 70,000 units for $20.00 each. Purchased 40,000 units for $13.20 each. Inventory on hand-60,000 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 $10,000.

Answer 1

Answer: Grivent hat Tomore maintain efficiently mange itt inventory, Treynar corlor Hon it internal records used first-in first-out . cest of gouds available forsale cost of goods units cost for aviallable for sale 12.20 - 20.000X1220 20:00 = 2.44,000 20000 70,000x12.50 12:50 Purchase 70.000 =875,000 feb 12 12180 July az 50,000 = 50.000X 12180 = 600.000 40,000x (3.20 13.20 Nov 17 . 40,000 NOV . . 528000 118111800 Total 180,000

cast of goods, Period Soild fifa. -fifo of unity . soild 1 cost Per unit Cost of good soild. 1. sales: - 12.20 20, poc 244ooo Aprizo 60.000 20.00 TiO01000 1, LO 0000 Sep 9 . 20.00 70.000 2644100 Total lu01000 Periodic Fifo Ending Inventory cost per cost of good Soild. Hof units . Soild fifo Purchase 875.000 70000 febia July az 12680 660,000 501000 1515000 oli 120000 of y cast y ending Good . soild = 2.64480 inventory ... 15150 ntoru . 1515006

2) Determine externally the for amount ending Trey nor would report inventory and cast of goods soild cost of good avabiabl Hof cost per unit Cost of good avaiable for sale lifo. unity ..1220 201000X 12-20 201000 Begining iniventory : 244000 8 75000 Purchase feb 12 12.50 701000 12.86 13.20 6401000 528660 501000 July 22 Nov 17 401006 4 1811,800 180/600 Total . good soild -cost of Periodic life on Cost Perunit Hof unib - Soild Sale: 625000 12.50 Apr 30 50/000 691200 12.80 u 2006 70,ooo 20.00 set q 1140,000 1:456,200 เว้น Goo

@ lifo Ending Inventory Periodic Lifo Hof cost per - ending unity . unit In verering 201000 12:20 2,44000 purchases: feb 12 8175000 701000 12.50 july 22 - 528000 40,006 13:20 Nov 17 1,6471006 Total 130,000 + cost of good soild Lifo = (456200 s cost of ending inven for lifo - 1,647100 3) Determin Hion of the arrount of lifo reserve reported by the trey in or at the end of the year' lifore serve = rfifo, in lifo , 1. Inventory inventor , . (1515000 164700.) 135030

u Recording year end adjusting entry for Life Required Lifo reserve at end of - current year = 13200 Beging balance of life 10,000 Balance required tobe tranferred to Lito reserve a (13200 - 10.000) = 53200 Credit Debit . Particular Date 3200 good soild cost of 3200 Decal ak or To Lif o rejereak I