Exercise 8-19 LIFO liquidation [LO8-1, 8-4, 8-6) The Reuschel Company began 2018

Question

Exercise 8-19 LIFO liquidation [LO8-1, 8-4, 8-6) The Reuschel Company began 2018 with inventory of 25,000 units at a cost of $8 per unit. During 2018, 65,000 units were purchased for $10.30 each. Sales for the year totaled 76,500 units leaving 13,500 units on hand at the end of 2018. Reuschel uses a periodic inventory system and the LIFO inventory cost method. Required 1. Calculate cost of goods sold for 2018 2. Calculate the effect of the LIFO on the income. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate cost of goods sold for 201 Required 2>

Explanation / Answer

1) LIFO Date Particulars Units   Cost Amount COGS 1-Jan Beginning Inventory                              25,000.00                           8.00                        200,000.00 15-Oct Purchase                              65,000.00                         10.30                        669,500.00 Total                              90,000.00                        869,500.00 29-Oct COGS                              76,500.00                        761,500.00 65000*10.30 + 11500*8 Ending Inventory                                13,500.00                         12.00                        108,000.00 13500*8 COGS 761,500 Ending Inventory                             108,000 2) COGS is higher under LIFO thus income would be lower under LIFO

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