Accounting for results on income for inventory using the LIFO cost method
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.
Problem
Accounting for inventory using the perpetual system—LIFO, and journalizing inventory transactions
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:
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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