17E_1 - Horngren'S Financial And Managerial Accounting

Question

Question: Golf Unlimited carries an inventory of putters and other golf clubs. The sales price of each putter is \(119. Company records indicate the following for a particular line ofGolf Unlimited’s putters:

Date Item Quantity Unit Cost

Nov. 1 Balance 24 \) 53

6 Sale 20

8 Purchase 30 70

17 Sale 30

30 Sale 2

 

Requirements

1. Prepare Golf Unlimited’s perpetual inventory record for the putters assumingGolf Unlimited uses the LIFO inventory costing method. Then identify the costof ending inventory and cost of goods sold for the month.

Step-by-Step Solution

Answer

Ending Inventory:$106

COGS:$3,266

Step-by-Step-Solution Step1: Perpetual Inventory Record using LIFO

Date	Purchase/opening			Sales			Balance
	Units	Cost per unit	Amount	Units	Cost per unit	Amount	Units	Cost per unit	Amount
Nov 1	24	$53	$1,272				24	$53	$1,272
6				20	$53	$1,060	4	$53	$212
8	30	$70	$2,100				4 30	$53 $70	$2,312
17				30	$70	$2,100	4	$53	$212
30				2	$53	$106	2	$53	$106
Total	54		$3,372	52		$3,266	2	$70	$106

Step 2: Ending inventory and COGS

Ending inventory in the perpetual system under the LIFO method is the value of ending inventory at the historical cost and the COGS would be based on current prices. This is so because of the implication of the last in first out method in the allocation of cost to the issued inventory.

 

In the given case, the ending inventory on 30^th Nov amounts to $106 and the COGS for the period amounts to $3,266.