Question

Bob's Bikes and Repairs uses the LIFO inventory method. Bob's Bikes an Repairs started December with 10 helmets that cost $58 each On December 19, Bob's Bikes and Repairs bought 15 helmets at $59 each On December 28, Bob's Bikes and Repairs sold 12 helmets. Prepare a perpetual inventory record for Bob's Bikes and Repairs. Start by entering the opening inventory balance. 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. (Enter the oldest inventory layers first.) LIFO: Purchases Unit Total Cost of goods sold Unit Total Qty Cost Cost Inventory on hand Unit Total Qty Cost Cost Date Qty Cost Cost Dec 1 19 15 59 28 Total 15

Answer 1

LIFO: Purchase Unit Cost Cost of goods sold Unit Cost Total Cost Date Qty Total Cost Qty Inventory in hand Qty Unit Cost Total Cost 10 $58 $580 Dec-01 Dec-19 15 $59 $885 10 $58 $59 $5801 $885 15 Dec-28 12 $59 $708 wwo $58 $59 $580 $177 $757 Total 15 $885 12 $708

Points:

• Total Cost = Quantity * Unit cost
• On Dec 28, Unit Cost is taken as $59 becase we are following LIFO (i.e Last in First out). While practicing LIFO we sell those inventory first which where purachsed most recently.
• While calculating total (i) in case of purchase & cost of goods sold we add the entire column & (ii) in case of invemtory in hand we simply add the inventory as at 28 december.