Question

Question:Boston Cycles started October with 12 bicycles that cost \(42 each. On October 16, Boston bought 40 bicycles at \)68 each. On October 31, Boston sold 34 bicycles for$100 each.

Preparing a perpetual inventory record and journal entries—LIFO

Requirements

1. Prepare Boston Cycle’s perpetual inventory record assuming the company uses theLIFO inventory costing method.

Short answer

The cost of goods sold under the LIFO method amounts to $2,312.

Step-by-step solution

Step-by-Step-SolutionStep1: LIFO costing method

LIFO costing is another method of inventory valuation in which the inventory is valued based on the recent purchasing cost assuming that the inventory is being used in the reverse order of acquiring them. The cost of ending inventory under this method is based on the historical cost.

Perpetual inventory record based on the LIFO method

Date	Purchase / Opening inventory	Sale	Balance
	Unit	Cost	Amount	Unit	Cost	Amount	Unit	Cost	Amount
Oct 1	12	$42	$504				12	$42	$504
Oct 16	40	$68	$2,720				12 40	$42 $68	$3,224
Oct 31				34	$68	$2,312	12 6	$42 $68	$912