Problem $8-4($Algo$)$ Various inventory transactions; determining inventory and cost of goods; LIFO

reserve $[$LO$8-1,8-2,8-3,8-4,8-6]$

Jillet Corporation began the year with inventory of $13,000$ units of its only product. The units cost $$8$ each. The company uses a

perpetual inventory system and the FIFO cost method. The following transactions occurred during the year:

a$.$ Purchased $65,000$ additional units at a cost of $$10$ per unit. Terms of the purchases were $\frac{2}{10},\frac{n}{30}.$ The company uses the

gross method to record purchase discounts. The inventory was purchased f$.$o$.$b$.$ shipping point and additional freight costs of

$$0\mathrm{.}50$ per unit were charged to Jillet.

b$.1,300$ units purchased during the year were returned to suppliers for credit. Jillet was also given credit for the freight charges of

$$0\mathrm{.}50$ per unit on the original purchase. The units were defective and were returned two days after they were received. The

remaining inventory was paid within the discount period. $($Hint: The discount applies only to inventory and not the freight.$)$

c$.$ Sales for the year totaled $60,000$ units at $$18$ per unit. $($Hint: The cost of the inventory sold includes the purchase cost of those

units plus freight less purchase discount.$)$

d$.$ On December $28,$ Jillet purchased $5,300$ additional units at $$10$ each. The goods were shipped f$.$o$.$b$.$ destination and arrived at

Jillet's warehouse on January $4$ of the following year.

e$.16,700$ units were on hand at the end of the year.

Required:

Determine ending inventory and cost of goods sold at the end of the year.

Assuming that operating expenses other than those indicated in the above transactions amounted to $$156,000,$ determine

income before income taxes for the year.

For financial reporting purposes, the company uses LIFO $($amounts based on a periodic inventory system$).$ Record the year$-$end

adjusting entry for the LIFO reserve, assuming the balance in the LIFO reserve at the beginning of the year is $$15,600.$

Determine the amount the company would report as income before taxes for the year under LIFO. Operating expenses other

than those indicated in the above transactions amounted to $$156,000.$