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FIFO Perpetual Inventory

The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Date  TransactionNumber
of UnitsPer UnitTotal

Apr. 3 Inventory90 $600 $54,000

8 Purchase180 720 129,600

11 Sale120 2,000 240,000

30 Sale75 2,000 150,000

May 8 Purchase150 800 120,000

10 Sale90 2,000 180,000

19 Sale45 2,000 90,000

28 Purchase150 880 132,000

June 5 Sale90 2,100 189,000

16 Sale120 2,100 252,000

21 Purchase270 960 259,200

28 Sale135 2,100 283,500

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

Dunne Co.
Schedule of Cost of Goods Sold
FIFO Method
For the Three Months Ended June 30

PurchasesCost of Goods SoldInventory

DateQuantityUnit CostTotal CostQuantityUnit CostTotal CostQuantityUnit CostTotal Cost

Apr. 3      $$

Apr. 8$$   

Apr. 11   $$

Apr. 30   

May 8   

May 10   

May 19   

May 28   

June 5   

June 16   

June 21   

June 28   

June 30Balances    $  $

2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. If an amount box does not require an entry, leave it blank.

Record sale

Record cost

3. Determine the gross profit from sales for the period.
$

4. Determine the ending inventory cost as of June 30.
$

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

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Answer 1

Answer is given below

Date Cost April 3 April 8 Opening balance Purchase 90 180 April 11 Sale 90 April 30 May 8 Sale Purchase Schedule of Cost of Goods sold (FIFO method) For 3 months ended June 30 Purchase Cost of Goods sold Inventory on Hand Unit Total Unit Total Unit Total Quantity Quantity Quantity Cost Cost Cost Cost Cost 90 $600 $54,000 180 $720 $129,600 $600 $54,000 $720 $129,600 $600 $54,000 30 $720 $21,600 150 $720 $108,000 75 $720 $54,000 75 $720 $54,000 150 $800 $120,000 $720 $54,000 150 $800 $120,000 $720 $54,000 15 $800 $12,000 135 $800 $108,000 45 $800 $36,000 90 $800 $72,000 150 $880 $132,000 90 $800 $72,000 $880 $132,000 90 $800 $72,000 150 $880 $132,000 120 $880 $105,600 30 $880 $26,400 270 $960 $259,200 30 $880 $26,400 $960 $259,200 30 $880 $26,400 | 105 $960 $100,800 165 $960 $158,400 750 $640,800 675 $536,400 165 $158,400 May 10 Sale 75 May 19 May 28 Sale Purchase June 5 June 16 June 21 Sale Sale Purchase 270 June 28 Sale Totals Total Sales Cost of goods sold Gross profit $1,384,500 $536,400 $848,100 Date Credit Debit $1,384,500 $1,384,500 Account title and explanation Accounts Receivable To Sales (To record sales) Cost of goods sold To Inventory (To record Cost of goods sold) $536,400 $536,400 3 Total Sales Cost of goods sold Gross profit $1,384,500 $536,400 $848,100 Ending inventory June 30 4 $158,400 5 Ending inventory would be lower value under LIFO method Working note: Opening stock Add: Purchase $54,000 $640,800 $694,800 $158,400 $536,400 Less: Closing stock Cost of Goods sold Units April 11 Sale April 30 Sale May 10 Sale May 19 Sale June 5 Sale June 16 Sale June 28 Sale Selling price $2,000 $2,000 $2,000 $2,000 $2,100 $2,100 $2,100 Total Sales $240,000 $150,000 $180,000 $90,000 $189,000 $252,000 $283,500 $1,384,500 120 135 Total Sales