Assume prices were stable during the period. The following values were obtained from the inventory records of Harris Company which has a fiscal year ending on December 31:Inventory, January 1, 2019, LIFO$80,000Inventory, March 31, 2019, LIFO70,000 Required:1.Under what conditions is Harris’s inventory liquidation not reflected in its first-quarter interim financial statements?2.Assuming that the liquidation is not to be reflected, what adjusting entry would Harris make? CHART OF ACCOUNTSHarris CompanyGeneral LedgerASSETSREVENUE111 Cash411 Sales Revenue121 Accounts Receivable131 InventoryEXPENSES142 Prepaid Insurance500 Cost of Goods Sold181 Equipment521 Salaries Expense198 Accumulated Depreciation525 Interest Expense532 Bad debt ExpenseLIABILITIES534 Insurance Expense211 Accounts Payable535 Supplies Expense231 Salaries Payable536 Utilities Expense251 Unearned Revenue541 Depreciation Expense261 Income Taxes Payable559 Miscellaneous Expenses910 Income Tax ExpenseEQUITY311 Common Stock331 Retained Earnings

LIFO method: The LIFO strategy works under the presumption that the last item of stock acquired, is…

Answered: Assume prices were stable during the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume prices were stable during the period. The following values were obtained from the inventory records of Harris Company which has a fiscal year ending on December 31:

Inventory, January 1, 2019, LIFO	$80,000
Inventory, March 31, 2019, LIFO	70,000

	Required:
1.	Under what conditions is Harris’s inventory liquidation not reflected in its first-quarter interim financial statements?
2.	Assuming that the liquidation is not to be reflected, what adjusting entry would Harris make?

CHART OF ACCOUNTS
Harris Company
General Ledger
ASSETS
REVENUE
111 Cash
411 Sales Revenue
121 Accounts Receivable
131 Inventory
EXPENSES
142 Prepaid Insurance
500 Cost of Goods Sold
181 Equipment
521 Salaries Expense
198 Accumulated Depreciation
525 Interest Expense
532 Bad debt Expense
LIABILITIES
534 Insurance Expense
211 Accounts Payable
535 Supplies Expense
231 Salaries Payable
536 Utilities Expense
251 Unearned Revenue
541 Depreciation Expense
261 Income Taxes Payable
559 Miscellaneous Expenses
910 Income Tax Expense
EQUITY
311 Common Stock
331 Retained Earnings

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