Accounting for results on income for inventory using the LIFO cost method [20-30 min]
Refer to the Fit World situation in Problem.
Requirement
1. Using the results from the LIFO costing method calculations in Problem, prepare a multi-step income statement for Fit World for the month ended January 31, 2012.
Accounting for inventory using the perpetual system—LIFO, and journalizing inventory transactions [30-40 min]
Fit World began January with an inventory of 80 crates of vitamins that cost a total of $4,000. During the month, Fit World purchased and sold merchandise on account as follows:
Purchase 1. . . . . . . . | 140 crates @ | $ 55 |
Sale 1. . . . . . . . . . . . | 160 crates @ | $ 100 |
Purchase 2. . . . . . . . | 160 crates @ | $ 60 |
Sale 2. . . . . . . . . . . . | 170 crates @ | $ 110 |
Fit World uses the LIFO method.
Cash payments on account totaled $5,000. Operating expenses for the month were $3,300, with two-thirds paid in cash, and the rest accrued as Accounts payable.
Requirements
1. Which inventory method most likely mimics the physical flow of Fit World’s inventory?
2. Prepare a perpetual inventory record, using LIFO cost, for this merchandise.
3. Journalize all transactions using LIFO.
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