Accounting!

APPLY THE CONCEPTS: LIFO inventory calculation

Click here to review an illustrated example of the LIFO calculation. The steps illustrated in the example are recapped below.

Below is the data for the month of January, 2011.

Compute the LIFO layers amounts for the cost of merchandise available for sale after each purchase and sale.

After 1/8 Purchase

After 1/14 Sale

After 1/22 Purchase

After 1/25 Sale

Based on your answers above, complete the worksheet below.

APPLY THE CONCEPTS: Recording changes in inventory under LIFO valuation

Under the perpetual system, two journal entries are are required to record sales; one to record the sale and one to record the cost of merchandise sold. Click on the links below to review the journal entries for purchases and sales transactions.

After a purchase or sale occurs, the transaction must be recorded or journalized. In the following journal, record the purchases and sales for the month, assuming that all inventory purchases were made with cash and all sales were made on account at a fixed unit price of $22 per unit. Several facts to remember: (1) All inventory purchases are made with cash and cash only; (2) All sales are made on account and on account only; and (3) when recording sales, Schiphol wants you to record the revenue portion of the transaction first.

If an amount box does not require an entry leave it blank.