Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 38 units @ $97 Sale 32 units Purchase 22 units @ $101 20 Sale 13 units Sale 11 units Purchase 30 units @ $105 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.

Answer 1

Ans.	Cost of Goods Sold Schedule
	First - in, First - out Method
	Portable DVD Players
	Date	Quantity	Purchases	Purchases	Quantity	COGS	COGS	Inventory	Inventory	Inventory
		Purchased	Unit cost	Total cost	Sold	Unit cost	Total cost	Quantity	Unit cost	Total cost
	1-Apr	38	$97.00	$3,686				38	$97.00	$3,686
	10-Apr				32	$97.00	$3,104	6	$97.00	$582
	15-Apr	22	$101.00	$2,222				6	$97.00	$582
								22	$101.00	$2,222
	20-Apr				6	$97.00	$582
					7	$101.00	$707	15	$101.00	$1,515
	24-Apr				11	$101.00	$1,111	4	$101.00	$404
	30-Apr	30	$105.00	$3,150				4	$101.00	$404
								30	$105.00	$3,150
	Total				Cost of goods sold		$5,504	Cost of Ending inventory		$3,554
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
Ans. B	Lower
	While using the LIFO method, ending inventory remains from first purchases, and the unit cost of first purchase
	is $97 which is the lowest unit cost, so we can say that the ending inventory from LIFO method will be lower than
	the FIFO method.