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Q29PGA_2

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Horngren'S Financial And Managerial Accounting
Found in: Page 367

Short Answer

Steel Mill began August with 50 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 $ 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method.

Total ending inventory under the LIFO method comes out to be $1,315.

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: LIFO Method

The LIFO method is just the opposite of the FIFO method. Under this system, the goods issued are valued at the current prices. Thus the issued inventory is valued at the recently purchased cost assuming that the inventories are being issued following the last-in-first-out sequence.

Step 2: Perpetual inventory table under the LIFO method

PurchasesCost of goods soldInventory on hand

Date

Qty

Unit cost

Total Cost

Qty

Unit cost

Total Cost

Qty

Unit Cost

Total Cost

Aug 1

50

$35

$1,750

Aug 3

45

$35

$1,575

5

$35

$175

Aug 8

90

$54

$4,860

5

90

$35

$54

$5,035

Aug 21

85

$54

$4,590

5

5

$35

$54

$445

Jan 26

15

$58

$870

5

5

15

$35

$54

$58

$1,315

Total

105

$5,730

130

$6,165

5

5

15

$35

$54

$58

$1,315

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