Question

LIFO

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. Date August 1 Units 8 Unit Cost $147 Total Cost $ 1,176 August 4 August 11 August 13 137 1,370 Transactions Beginning Inventory Sale (5160 each) Purchase Sale ($175 each) Purchase Sale ($185 each) Purchase August 20 1,270 August 26 August 29 117 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. If 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.) No Date Answer is complete but not entirely correct. General Journal Dobit Cost of Goods Sold Inventory Credit August 31 X® 57

Answer 1

Correct Answer:

No.	Date	General journal	Debit	Credit
1	31-Aug	Inventory	$          280.00
		Cost of goods sold		$     280.00

Working:

	LIFO
A	Total Units Available for sale			39		$      5,103.00
	Units Sold			24
	Ending Inventory Units			15
	Valuation
	Cost of Goods Sold		11.00		$                       117.00	1,287.00
			10.00		$                       127.00	1,270.00
			3.00		$                       137.00	411.00
						-
						-
						-
B	Cost of Goods Sold		24	units		$      2,968.00
A-B	Ending Inventory		15	units		$      2,135.00

Specific Identifications
Date	Goods Available for sale			Cost of Goods Sold			Ending 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	Cost per Unit	Inventory Balance
Beginning Inventory	8	$        147.00	$         1,176.00	6	$ 147.00	$          882.00	2	$      147.00	$          294.00
Purchases
	10	$        137.00	$         1,370.00	8	$ 137.00	$      1,096.00	2	$      137.00	$          274.00
	10	$        127.00	$         1,270.00	10	$ 127.00	$      1,270.00	0	$      127.00	$                    -
	11	$        117.00	$         1,287.00	0	$ 117.00	$                   -	11	$      117.00	$       1,287.00
Totals	39		$         5,103.00	24		$      3,248.00	15		$       1,855.00

	Cost of goods sold
Specific Identifications	$ 3,248.00
LIFO	$ 2,968.00
Difference		$          280.00

End of answer.

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