(L.OBJ. 2, 3, 4) Accounting for inventory using the perpetual system—LIFO and journalizi...

(L.OBJ. 2, 3, 4) Accounting for inventory using the perpetual system—LIFO and journalizing Inventory transactions [30—40 min]

Fit World began January with an inventory of 60 crates of vitamins that cost a total of $3,000. During the month, Fit World purchased and sold merchandise on account as follows:

Fit World uses the UFO method.

Cash payments on account totaled $5,000. Operating expenses for the month were $2,400, 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.