Mogul Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following
Question:
Mogul Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year:
Required:
1. Determine the amount Mogul would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system. Beginning inventory under average cost was 80,000 units with a average cost of $4.25 each.
2. Determine the amount Mogul 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 80,000 units with a cost of $4.00 each.
3. Determine the amount Mogul 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 $20,000.
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