Answered: 7. If Pete’s chooses to report…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete’s Tennis Shop uses a periodic inventory system.

Date		Transactions	Units	Unit Cost	Total Cost
August	1	Beginning inventory	8			$150	$1,200
August	4	Sale ($175 each)	5
August	11	Purchase	10			140	1,400
August	13	Sale ($190 each)	8
August	20	Purchase	10			130	1,300
August	26	Sale ($200 each)	11
August	29	Purchase	12			120	1,440
							5,340

For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.

7. If Pete’s chooses to report inventory using LIFO, record the LIFO adjustment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the LIFO adjustment.
Note: Enter debits before credits.