Question

ook Show Me How Calculator Perpetual Inventory Using UFO Beginning inventory, purchases, and sales data for prepaid cell phones for December are as follows: Inventory Purchases Sales Dec. 1 3,300 units at $28 Dec. 10 1 .550 units at $30 Dec. 12 2,310 units Dec. 20 1 ,455 units at $32 Dec. 14 1.980 units Dec 31 990 units a. Assuming that the perpetual inventory system is used, costing by the UFO method, determine the cost of goods sold for each sale and the inventory balance after each presenting the data in the form ilustrated in Bibit 4. Under UFO, units are in inventory at two different costs enter the units with the HIGHER cost first in the cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost Schedule of Cost of Goods Sold LIFO Method Prepaid Cell Phone Cast of Cost of antity Purchase purchases Quantity Goods sold Goods Sold Inventory Inventory Inventory Purchased Unit Cost Total Cost Sold Unit Cost Total Cost Quantity Unit Cost Total Cost Dec. 20 Dec 12 < Previous Next 4 02/03 100

Answer 1

Date	quantity purchased	purchases unit cost	puchase total cost	quantity sold	cost of goods sold unit cost	cost of goods sold total cost	inventory cost	inventory unit cost	inventory total cost
Dec-01							3300	28	92400
Dec-10	1650	30	49500				1650	30	49500
							3300	28	92400
Dec-12				1650	30	49500	2640	28	73920
				660	28	18480
Dec-14				1980	28	55440	660	28	18480
Dec-20	1485	32	47520				1485	32	47520
							660	28	18480
Dec-31				990	32	31680	495	32	15840
							660	28	18480
Dec-31	balances					155100			34320

Yes, if FIFO would have been used lower-cost items would have been sold and closing inventory would have been of higher value.

Question solution:

Date	quantity purchased	purchases unit cost	puchase total cost	quantity sold	cost of goods sold unit cost	cost of goods sold total cost	inventory cost	inventory unit cost	inventory total cost
May-03	20	20	400				20	20	400
May-10				8	20	160	12	20	240
May-17	34	22	748				12	20	240
							34	22	748
May-20				12	20	240	32	22	704
				2	22	44
May-23				5	22	110	27	22	594
May-30	35	23	805				27	22	594
							35	23	805
balance				27		554			1399

From this it is clear that on may 23 cost of goods sold was $110 and selling price for that was $195 and therefore gross profit is $195 - $110 = $85. Option a) is correct.