Health World began January with an inventory of 50 crates of vitamins that cost a total of $1,000. During the month, Health World purchased and sold merchandise on account as follows:
Purchase 1 . . . . . . . . 100 crates @ $ 25
Sale 1 . . . . . . . . . . . . 130 crates @ $ 40
Purchase 2 . . . . . . . . 90 crates @ $ 30
Sale 2 . . . . . . . . . . . . 100 crates @ $ 50
Health World uses the LIFO method.
Cash payments on account totaled $5,500. Operating expenses for the month were $3,000, 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 Health World’s inventory?
2. Prepare a perpetual inventory record, using LIFO cost, for this merchandise.
3. Journalize all transactions using LIFO.