Accounting for results on income for inventory using the LIFO cost method
Refer to the Health World situation in Problem.
Requirement
1. Using the results from the LIFO costing method calculations in Problem, prepare a multi-step income statement for Health World for the month ended January 31, 2012.
Problem
Accounting for inventory using the perpetual system—LIFO and journalizing inventory transactions
Health World began January with an inventory of 50 crates of vitamins that cost a total of $1,000. During the month, Health World purchased and sold merchandise on account as follows:
Health World uses the LIFO method.
Cash payments on account totaled $5,500. Operating expenses for the month were $3,000, 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 Health 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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