Question

Question 1

Chapter 7 Homework Assignment (part 1 Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 41 units @ $64 Sale 33 units Purchase 19 units @ $67 Sale 15 units Sale 6 units Purchase 29 units @ $70 The business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. a. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players Quantity Cost Cost of Cost of Merchandise Merchandise Sold Unit Cost Sold Total Cost Sold Quantity Purchases Purchases Merchandise Date Purchased Unit Cost Total Cost Inventory Inventory Inventory Quantity Iloit Cost Total Cost Apr. S Apr. 10 Apr. 11110 101 Q1I00 1100 Apr. Balances

Answer 1

Solution a Cost of Merchandise sold schedule First In First Out method (FIFO) Portable DVD Players Purchases Sale Total Cost = Total Cost = Unit cost Unit cost Qty x Unit Qty x Unit cost cost Balance Inventory Date Qty Qty Qty Unit cost Total Cost = Qty x Unit cost April 01 41 64 2,624.00 April 10 33 64 2,112.00 8 64 512.00 April 15 1 9 67 1,273.00 8 19 64 6 7 512.00 1,273.00 April 20 8 7 6 64 67 67 512.00 469.00 402.00 - 12 6 67 67 804.00 402.00 April 24 April 30 29 7 0 2,030.00 6 29 67 7 0 402.00 2,030.00 2,432.00 April 30 Balances 3,495.00

Solution b Based upon the preceeding data, Inventory value will be Lower in LIFO method, as units having higer values are received afterwards and issue firstly, thus the stock having lesser value will be remaining. The following table is drawn to support the Answer Cost of Merchandise sold schedule Last In First Out method (LIFO) Portable DVD Players Purchases Sale Total Cost = Total Cost = Unit cost Unit cost Qty x Unit Qty x Unit cost cost Balance Inventory Date Qty Qty Unit cost Total Cost = Qty x Unit cost April 01 41 64 2,624.00 April 10 33 64 2,112.00 00 64 512.00 April 15 19 6 7 1,273.00 00 64 67 April 20 15 67 512.00 1,273.00 512.00 268.00 1,005.00 00 April 24 4 2 67 64 268.00 128.00 April 30 29 7 0 2,030.00 384.00 384.00 2,030.00 2,414.00 2970 April 30 Balances 3,513.00

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