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Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May

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Answer #1
Ans. A Schedule of Cost of Merchandise Sold
LIFO Method
Prepaid Cell Phones
Purchase Cost of goods sold Balance
Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost
1-May 1200 $22.00 $26,400 1200 $22.00 $26,400
10-May 600 $24.00 $14,400 1200 $22.00 $26,400
600 $24.00 $14,400
12-May 600 $24.00 $14,400
240 $22.00 $5,280 960 $22.00 $21,120
14-May 720 $22.00 $15,840 240 $22.00 $5,280
20-May 540 $26.00 $14,040 240 $22.00 $5,280
540 $26.00 $14,040
31-May 360 $26.00 $9,360 240 $22.00 $5,280
180 $26.00 $4,680
Total Cost of goods sold $44,880 Ending inventory $9,960
*In LIFO method the units that have purchased last, are released the first one and ending inventory units
remain from the first purchase.
Ans. B While using the FIFO method, ending inventory remains from the last purchases, and the unit cost of last purchase
is $26 which is the highest unit cost, so we can say that the ending inventory from FIFO method will be higher than
the LIFO method.
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