Question

During July, Laesch Company, which uses a perpetual inventory system, sold 1,430 units from its LIFO-based inventory, which had originally cost $19 per unit. The replacement cost is expected to be $28 per unit.
Required: Respond to the following two independent scenarios as requested
Case 1: In July, the company is planning to reduce its inventory and expects to replace only 980 of these units by December 31, the end of its fiscal year
Prepare the entry in July to record the sale of the 1,390 units (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Laesch Company

Journal entries:

Sale of 1,430 units

Debit Cash or Accounts Receivable $40,040

Credit Sales Revenue $40,040

To record the sale of 1,430 units of inventory at $28.

Debit Cost of goods sold $27,170

Credit Inventory $27,170

To record the cost of the goods sold at $19.

Sale of 1,390 units

Debit Cash or Accounts Receivable $38,920

Credit Sales Revenue $38,920

To record the sale of 1,390 units of inventory at $28.

Debit Cost of goods sold $26,410

Credit Inventory $26,410

To record the cost of the goods sold at $19.

Explanation:

Laesch Company can use Journal entries to record its business transactions as they occur on a daily basis.  Journal entries show the accounts involved in any transaction and the one to be debited or credited.  From the journal, postings are made to the general ledger into individual accounts.