Wakefield Company uses a perpetual inventory system.In August,it sold 2,000 units from its LIFO-base inventory,which had originally cost $35 per unit.The replacement cost is expected to be $45 per unit.The company is planning to reduce its inventory and expects to replace only 1,500 of these units by December 31,the end of its fiscal year.The company replaced 1,500 units in November at an actual cost of $50 per unit.
-Based on the preceding information,in the entry to record the replacement of the 1,500 units in November,Accounts Payable will be credited for:
A)$67,500.
B)$75,000.
C)$62,500.
D)$60,000.

Question

Quizplus · Accepted Answer

To calculate the credit to Accounts Payable, we need to multiply the number of units replaced (1,500) by their actual cost ($50 per unit):
1,500 units × $50 per unit = $75,000

Therefore, the correct choice is B, $75,000, as that is the amount that should be credited to Accounts Payable.

Wakefield Company Uses a Perpetual Inventory System