Salem Sportwears uses the? (perpetual) LIFO inventory method. Salem Sportwears s

Question

Salem Sportwears uses the? (perpetual) LIFO inventory method. Salem Sportwears started July with 4 helmets that cost $ 50 each. On July ?19, Salem Sportwears bought 14 helmets at $ 57 each. On July ?28, Salem Sportwears sold 5 helmets. 1. The July 19 purchase of inventory was on account. 2. The July 28 sale of inventory was on account. Salem Sportwears sold each helmet for $ 102. Prepare the required journal entries for the purchase and sale of inventory. ?(Record debits? first, then credits. Exclude explanations from any journal? entries.)

1. Prepare the journal entry for the purchase of inventory on account. July ?19: Salem Sportwears bought 14 helmets at $ 57 each.

2. Prepare the journal entry for the sale of inventory on account.

Begin by journalizing the revenue portion of the sale.

JulyJuly

?28:

Salem SportwearsSalem Sportwears

sold

55

helmets.

Salem SportwearsSalem Sportwears

sold each helmet for$102

?(Do not journalize the cost related to the sale yet. We will do this in the next journal? entry.)

Now journalize the cost of the sale on the 28th under the LIFO method.

JulyJuly

?28:

Salem SportwearsSalem Sportwears

sold

55

helmets.

Explanation / Answer

Date Accounts Debit Credit 1 July 19 Inventory (14 x $57) 798 Accounts payable 798 2 July 28 Accounts receivable 510 Sales revenue (5 x $102) 510 July 28 Cost of goods sold 285 Inventory (5 x $57) 285

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