Question

Beginning inventory, purchases, and sales data for prepaid cell phones for Mary are as follows 1,500 units at $35 1,350 units at $37 May 12 2,100 units 1,800 units 900 units 3,000 units at $33 May 10 May 20 May 14 May 31 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 Soid LIFO Method Cell Phones Inventory Unit Cost InventonY Quantity Date Purchased Total Cost Unit Cost Unit Cost Total Cost Sold

Answer 1

Answer a.

Last-in first-out method Purchases Cost per unit Sa les Cost per unit Ba lance Cost per unit Date Units Units Units Total Total Total May 1 3000 3000 1500 2400 0 600 600 1350 600 450 1050 99000 99000 52500 79200 0 19800 19800 49950 19800 16650 36450 May 10 May 12 May 14 35 1500 52500 35 600 1500 1800 19800 52500 59400 35 35 1350 May 20 37 49950 37 May 31 0 900 4800 0 33300 165000 37 37 Totals 2850 102450

Answer b.

Based on preceding data, the inventory will be higher using the FIFO method.