Use the following to answer questions 27-30: At year-end, the perpetual inventor

Question

Use the following to answer questions 27-30: At year-end, the perpetual inventory records of Crawford Co. indicate 60 units of a particular product in inventory, acquired at the following dates and unit costs: Purchased in August: 30 units at $950 per unit Purchased in November: 30 units at $900 per unit However, a complete physical inventory taken at year-end indicates only 50 units of this product actually are on hand. 27. Refer to the above data. Assuming that Crawford uses the LIFO flow assumption, it should record this inventory shrinkage by: A) Debiting Cost of Goods Sold $9,000. B) Crediting Cost of Goods Sold $9,500. C) Debiting Cost of Goods Sold $9,500. D) Crediting Cost of Goods Sold $9,000. Page 5

Explanation / Answer

LIFO Date Particulars Units   Cost Amount COGS August Purchase                    30.00                  950.00            28,500.00 November Purchase                    30.00                  900.00            27,000.00 Total                    60.00            55,500.00 COGS                    10.00              9,000.00 10*900 Ending Inventory                    50.00            46,500.00 20*900 + 30*950 Q27 A Debiting COGS                        9,000.00 Q30 C Ending Inventory                      46,500.00 FIFO Date Particulars Units   Cost Amount COGS August Purchase                    30.00                  950.00            28,500.00 November Purchase                    30.00                  900.00            27,000.00 Total                    60.00            55,500.00 COGS                    10.00              9,500.00 10*950 Ending Inventory                    50.00            46,000.00 20*950 + 30*900 Q28 D Debiting COGS                        9,500.00 Q29 A Ending Inventory                      46,000.00

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