Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May 1 4,000 units at $30 May 10 2,000 units at $32 May 12 2,800 units May 20 1,800 units at $34 May 14 2,400 units May 31 1,200 units Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out 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 3. 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. Schedule of Cost of Merchandise Sold FIFO Method Prepaid Cell Phones Purchases Total Cost Cost of Merchandise Sold Quantity Cost of Merchandise Sold Unit Cost Purchases Quantity Purchases Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Date May 1 May 10 May 10 o 0 0 May 12 0 0 May 14 May 20 I II II May 31 May 31 Balances

Answer 1

	Purchases			Cost of Merchandise sold			Inventory
	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost
May 1							4000	30	120000
May 10	2000	32	64000				4000	30	120000
							2000	32	64000
May 12				2800	30	84000	1200	30	36000
							2000	32	64000
May 14				1200	30	36000
				1200	32	38400	800	32	25600
May 20	1800	34	61200				800	32	25600
							1800	34	61200
May 31				800	32	25600
				400	34	13600	1400	34	47600
May 31 Balances						197600			47600