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

Price: $3.99


P6-31A Accounting for inventory using the perpetual system—LIFO, and
journalizing inventory transactions [30–40 min]

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:

Purchase 1 140 crates @ $ 55
Sale 1 160 crates @ $ 100
Purchase 2 160 crates @ $ 60
Sale 2 170 crates @ $ 110

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.