Martins Game Stop began the current quarter with the following inventory: 900 units @ $10 per unit and 250 units @ $12 per unit. During the quarter, Martin purchased 400 units @ $13 per unit and sold 680 units. Martin prepares interim financial statements each quarter.
Required:
a.Determine the amount of LIFO liquidation profit for the quarter.
b.Assume the liquidation is not to be reflected in the current quarter's financial statements. Prepare the necessary adjusting entry.
c.Explain the circumstances when an inventory liquidation is not reported on interim financial statements.

Question

Martins Game Stop began the current quarter with the following inventory: 900 units @ $10 per unit and 250 units @ $12 per unit. During the quarter, Martin purchased 400 units @ $13 per unit and sold 680 units. Martin prepares interim financial statements each quarter.
Required: 
a.Determine the amount of LIFO liquidation profit for the quarter.
b.Assume the liquidation is not to be reflected in the current quarter's financial statements. Prepare the necessary adjusting entry.
c.Explain the circumstances when an inventory liquidation is not reported on interim financial statements.

Quizplus · Accepted Answer

The Answer of Martins Game Stop began the current quarter with the following inventory: 900 units @ $10 per unit and 250 units @ $12 per unit. During the quarter, Martin purchased 400 units @ $13 per unit and sold 680 units. Martin prepares interim financial statements each quarter.
Required: 
a.Determine the amount of LIFO liquidation profit for the quarter.
b.Assume the liquidation is not to be reflected in the current quarter's financial statements. Prepare the necessary adjusting entry.
c.Explain the circumstances when an inventory liquidation is not reported on interim financial statements.

Martins Game Stop Began the Current Quarter with the Following