Question

Perpetual Inventory Using LIFO

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

Inventory		Purchases		Sales
May 1	1,200 units at $33	May 10	600 units at $35	May 12	840 units
		May 20	540 units at $37	May 14	720 units
				May 31	360 units

a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

Schedule of Cost of Merchandise Sold
LIFO Method
Prepaid Cell Phones
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
May 1								$	$
May 10		$	$
May 12					$	$
May 14
May 20
May 31
May 31	Balances					$			$

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?

Answer 1

Perpetual : LIFO ( Last In First Out) Unit Date Qty Cost total Cost May-01 May-10 600 35.00 21000 Qty Unit Cost total Cost Qty Unit Cost total Cost 1200 33.00 39600 1200 33.00 39600 600 35.00 21000 960 33.00 31680 May-12 600 240 720 35.00 33.00 33.00 21000 7920 23760 May-14 May-20 540 37.00 19980.00 240 240 540 33.00 33.00 37.00 33.00 37.00 7920 7920 19980 7920 6660 14580 May-31 360 371 13320 240 180| 420 Totals 1920 66000 Inventory will be higher ar lower under FIFO Higher