Chapter 5, Problem 40AP

Computing LIFO and journalizing inventory transactions (Learning Objectives 1 & 2) 15-20 min.

Inland Equipment Sales, Inc., sells hand-held engine analyzers to automotive service shops. Inland Equipment Sales, Inc., started November with an inventory of 55 units that cost a total of $8,470. During the month, Inland Equipment Sales, Inc., purchased and sold merchandise on account as follows:

Nov 6	Purchased 105 units @ $168
13	Sold 90 units @ $310
19	Purchased 70 units @ $172
25	Sold 40 units @ $310
29	Sold 85 units @ $310

Inland Equipment Sales, Inc., uses the LIFO method. Cash payments on account totaled $19,900, Operating expenses for the month were $13,500, of which two-thirds were paid in cash and the rest accrued as Accounts Payable.

Requirements

1. 1. Which inventory method (excluding specific unit) most likely mimics the physical flow of Inland Equipment Sales, Inc.’s inventory?
2. 2. Prepare a perpetual inventory record, using LIFO cost, for this merchandise.
3. 3. Journalize all transactions using LIFO. Record the payments on account and the operating expenses on November 30.