To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its inventory during the year: January 1 Beginning inventory-29,000 units. February 12 Purchased 79,000 units for $14.30 each. April 30 Sold 50,000 units for $21.80 each. July 22 Purchased 59,000 units for $14.60 each. September 9 Sold 79,000 units for $21.80 each. November 17 Purchased 49,000 units for $15.00 each. December 31 Ending inventory-87,000 units. Required: 1. Determine the amount Telnex would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. Beginning inventory under FIFO was 29,000 units with a cost of $14.00 each. 2. Determine the amount Telnex would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. Beginning inventory under LIFO was 29,000 units with a cost of $13.50 each. 3. Determine the amount Telnex would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve. The balance of the LIFO reserve at the beginning of the year was $14,500.
To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under a perpetual inventory system. The following information relates to its inventory during the year: January 1 Beginning inventory-29,000 units. February 12 Purchased 79,000 units for $14.30 each. April 30 Sold 50,000 units for $21.80 each. July 22 Purchased 59,000 units for $14.60 each. September 9 Sold 79,000 units for $21.80 each. November 17 Purchased 49,000 units for $15.00 each. December 31 Ending inventory-87,000 units. Required: 1. Determine the amount Telnex would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. Beginning inventory under FIFO was 29,000 units with a cost of $14.00 each. 2. Determine the amount Telnex would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. Beginning inventory under LIFO was 29,000 units with a cost of $13.50 each. 3. Determine the amount Telnex would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve. The balance of the LIFO reserve at the beginning of the year was $14,500.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:To more efficiently manage its inventory, Telnex Corporation maintains its internal inventory records using first-in, first-out (FIFO) under
a perpetual inventory system. The following information relates to its inventory during the year:
January 1 Beginning inventory-29,000 units.
February 12 Purchased 79,000 units for $14.30 each.
April 30 Sold 50,000 units for $21.80 each.
July 22 Purchased 59,000 units for $14.60 each.
September 9 Sold 79,000 units for $21.80 each.
November 17 Purchased 49,000 units for $15.00 each.
December 31 Ending inventory-87,000 units.
Required:
1. Determine the amount Telnex would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO)
under a perpetual inventory system. Beginning inventory under FIFO was 29,000 units with a cost of $14.00 each.
2. Determine the amount Telnex would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO)
under a periodic inventory system. Beginning inventory under LIFO was 29,000 units with a cost of $13.50 each.
3. Determine the amount Telnex would report for its LIFO reserve at the end of the year.
4. Record the year-end adjusting entry for the LIFO reserve. The balance of the LIFO reserve at the beginning of the year was
$14,500.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Required 4
Determine the amount Telnex would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. Beginning inventory under FIFO was 29,000
units with a cost of $14.00 each.
Cost of Goods Available for Sale
Cost of Goods Sold - April 30
Cost of Goods Sold - September 9
Inventory Balance
Perpetual FIFO:
Cost of
Number Cost per
of units unit
Goods
Available for
Sale
Number
of units
sold
Cost per
unit
Cost of
Goods Sold
Number
of units
sold
Cost per
unit
Cost of
Goods Sold
Total Cost of
Goods Sold
Number of
units in
Cost per
ending
inventory
unit
Ending
Inventory
Beginning Inventory
Purchases:
29,000 $14.00 $ 406,000
$
14.00
14.00 $
0
$
14.00 $
0
February 12
July 22
November 17
Total
79,000 14.30 1,129,700
59,000 14.60 861,400
49,000 15.00
735,000
216,000
14.30
14.30
14.30
0
14.60
0
14.60
14.60
15.00
15.00
15.00
$ 3,132,100
0
$
0
0
$
0 $
0
0
$
0
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Step 1: Introduction to inventory valuation method:
VIEWStep 2: Requirement 1- calculation of cost of goods sold and ending inventory under perpetual FIFO:
VIEWStep 3: Requirement 2- calculation of cost of goods sold and ending inventory under periodic LIFO:
VIEWStep 4: Requirement 3- Calculation of LIFO reserve:
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