Question

Mountain Cycles started August with 25 bicycles that cost $65 each. On August 16, Mountain bought 50 bicycles at S80 each. On August 31, Mountain sold 42 bicycles for $99 each Requirements 1. Prepare Mountain Cycle's perpetual inventory record assuming the company uses the LIFO inventory costing method. 2 Journalize the August 16 purchase of merchandise inventory on account and the August 31 sale of merchandise inventory on account Requirement 1. Prepare Mountain Cycle's perpetual inventory record assuming the company uses the LIFO inventory costing method Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of inventory purchased, sold, and on hand at the end of the period. For cost of goods sold, enter the first layer out under LIFO costing first. For inventory on hand, enter the oldest inventory layer first Abbreviation used: QTY Quantity, Tot.Total) Mountain Cycles Cost of Goods Sold ventory on Hand Date QTY Unit Cost Tot. Cost QTY Unit Cost Tot. CostQTYUnit Cost Tot. Cost

Answer 1

Date	Purchases			Cost of Goods sold			Inventory on hand
	QTY	Unit Cost	Total Cost	QTY	Unit Cost	Total Cost	QTY	Unit Cost	Total Cost
Aug-01							25	$     65.00	$ 1,625.00
Aug-16	50	$    80.00	$ 4,000.00				25	$     65.00	$ 1,625.00
							50	$     80.00	$ 4,000.00
Aug-31				42	$    80.00	$ 3,360.00	25	$     65.00	$ 1,625.00
							8	$     80.00	$     640.00
Total	50		$ 4,000.00	42		$ 3,360.00	33		$ 2,265.00

Journal entries

Date	General Journal	Debit	Credit
Aug-16	Merchandise Inventory	$ 4,000.00
	Accounts payables		$ 4,000.00
	(To record purchases)
Aug-31	Accounts receivables	$ 4,158.00
	Sales revenue		$ 4,158.00
	(To record sales revenue)
Aug-31	Cost of goods sold	$ 3,360.00
	Merchandise Inventory		$ 3,360.00
	(To record cost of goods sold)