Inventory Flow Assumptions
the Perpetual Inventory Records of Handy Hardware

question 71

Essay

Inventory flow assumptions
The perpetual inventory records of Handy Hardware show 150 units of a particular product on hand, acquired at the following dates and costs:
On June 3, Handy sold 120 units of this product.
Instructions: Prepare a journal entry to record the cost of goods sold relating to the sale on June 3, assuming that Handy uses:
(a) A LIFO flow assumption.
(b) A FIFO flow assumption.
(c) The average cost (or moving average) flow assumption.
$$\begin{array} { | l | c | c | c | } \hline \text { Purchase } & \text { Quantity } & \text { Unit Cost } & \text { Total Cost } \\\hline \text { Date } & & & \\\hline \text { May 10 } & 50 & \$ 85 & \$ 4,250 \\\hline \text { June 1 } & \underline { 100 } & 100 & \underline { 10,000 } \\\hline \text { Total on hand } & \underline { \underline { 150 } } & & \underline { \underline { \$ 14,250 } } \\\hline & & & \\\hline\end{array}$$ $\begin{array}{lrr}&\text { General Journal }\\ \text {20 } &\\ \text {June 3 \underline{\quad} } &\\ \text { (a) } &\\ \text { (b) } &\\ \text { (c)} &\\\end{array}$

---

Definitions:

Learned Capabilities

Skills, knowledge, or competencies that are acquired through experience, education, or training rather than being innate.

Employee Aptitudes

The natural talents or ability of workers to perform specific tasks or learn new skills.

Paper Mill

A company or platform that produces academic essays or research papers for a fee, often resulting in plagiarism.

Job Performance

Refers to the degree to which an employee successfully fulfills the roles, obligations, and expectations of their position.