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9 September, 23:47

The following information pertains to the inventory of Parvin Company during Year 2: Jan. 1 Beginning Inventory 400 units @ $ 30 Apr. 1 Purchased 2,000 units @ $ 35 Oct. 1 Purchased 600 units @ $ 38 During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $75,000, inventory of $12,000, common stock of $50,000, and retained earnings of $37,000. Required a. Record the above transactions in general journal form and post to T-accounts using (1) FIFO and (2) LIFO. Use a separate set of journal entries and T-accounts for each method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 10 September, 03:13
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    Required a. Record the above transactions in general journal form and post to T-accounts using (1) FIFO and (2) LIFO. Use a separate set of journal entries and T-accounts for each method.

    Explanation:

    Units Cost Price Cost Price

    Begining Inventory 400 30 12.000

    purchase 1 2.000 35 70.000

    purchase 2 600 38

    Sales 1.700 90 153.000

    FIFO Units Cost Sale Price Cost Price Cost of goods

    Begining Inventory 400 30 400 12.000 12000

    purchase 1 2.000 35 1300 70.000 45500

    purchase 2 600 38 0 22.800 0

    Sales 1.700 90 153.000 57500

    0

    LIFO Units Cost Sale Price Cost Price Cost of goods

    Begining Inventory 400 30 0 12.000 0

    purchase 1 2.000 35 1.100 70.000 38500

    purchase 2 600 38 600 22.800 22800

    Sales 1.700 90 153.000 61300

    0

    Fifo Lifo

    Revenue 153.000 153.000

    Cost of goods 57500 61300

    Gross margin 95.500 91.700

    Expenses 41500 41500

    Ebit 54.000 50.200

    Tax rate 30% 30%

    Tax expense 16200 15060

    Net Income 37.800 35.140

    FiFO

    1

    Db Cash 153.000

    Cr Revenue 153.000

    2

    Db Cost of goods 57500

    Cr Inventory 57500

    3

    Db Expenses 41500

    Cr Cash 41500

    4

    Db tax expense 16200

    Cr cash 16200

    LIFO

    1

    Db Cash 153.000

    Cr Revenue 153.000

    2

    Db Cost of goods 61300

    Cr Inventory 61300

    3

    Db Expenses 41500

    Cr Cash 41500

    4

    Db tax expense 15060

    Cr cash 15060
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