Blossom Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting purposes....

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Blossom Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting purposes. At January 1,

What is the journal entry needed to record the LIFO effect at December 31, 2020? (If no entry is required, select No entry

business accounting

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Answer 1

Answer #1

Requirement (a):

LIFO reserve Balance at December 31,2020	$1,485,100
LIFO Effect	$97,400

Journal Entry:

Date	Account titles and explanation	Debit	Credit
Dec 31,2020	Cost of goods sold	$97,400
	Allowance to Reduce inventory to LIFO		$97,400
	[To record the LIFO effect]

Calculations:


FIFO inventory Balance at December 31,2020	$2,875,500
LIFO inventory Balance at December 31,2020	$1,390,400
LIFO reserve Balance at December 31,2020	$1,485,100


LIFO reserve balance at December 31,2020	$1,485,100
LIFO reserve balance at January 1,2020	$1,387,700
LIFO Effect	$97,400

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Answer 2

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