E6–2 Elmo’s Music carries a large inventory of guitars and other musical instruments. The store uses the FIFO method and a perpetual inventory system. Company records indicate the following for a particular line of guitars that sell for $1,600 each:
Date | Item | Quantity | Unit Cost |
---|---|---|---|
May 1 | Balance | 5 | $900 |
6 | Sale | 3 | |
8 | Purchase | 10 | 840 |
17 | Sale | 4 | |
30 | Purchase | 5 | 840 |
Required
Prepare a perpetual inventory record for the guitars. Then determine the amounts Elmo’s Music should report for ending inventory and cost of goods sold under the FIFO method.
Answer 1. Perpatual Inventory Record for Guitars | |||||||||
FIFO PERPETUAL INVENTORY METHOD | |||||||||
PURCHASE | COST OF GOODS SOLD | BALANCE | |||||||
DATE | QUANTITY | UNIT COST | TOTAL COST | QUANTITY | UNIT COST | TOTAL COST | QUANTITY | UNIT COST | TOTAL COST |
Beg inventory | 5 | $ 900 | $ 4,500 | ||||||
6-May | 3 | $ 900 | $ 2,700 | 2 | $ 900 | $ 1,800 | |||
8-May | 10 | $ 840 | $ 8,400 | 2 | $ 900 | $ 1,800 | |||
10 | $ 840 | $ 8,400 | |||||||
17-May | 2 | $ 900 | $ 1,800 | $ - | |||||
2 | $ 840 | $ 1,680 | 8 | $ 840 | $ 6,720 | ||||
30-May | 5 | $ 840 | $ 4,200 | 8 | $ 840 | $ 6,720 | |||
5 | $ 840 | $ 4,200 | |||||||
Total | 15 | $ 1,680 | $ 12,600 | 7 | $ 2,640 | $ 6,180 | |||
Answer 2 Value of Cost of Goods sold and ending inventory | |||||||||
Cost of Good sold | $ 6,180 | ||||||||
Value of Ending Units | $ 10,920 | ||||||||
Above answer detailed below | |||||||||
COST OF GOODS SOLD | |||||||||
QUANTITY | UNIT COST | TOTAL COST | |||||||
3 | $ 900 | $ 2,700 | |||||||
2 | $ 900 | $ 1,800 | |||||||
2 | $ 840 | $ 1,680 | |||||||
7 | $ 2,640 | $ 6,180 | |||||||
Ending Units Value | |||||||||
QUANTITY | UNIT COST | TOTAL COST | |||||||
8 | $ 840 | $ 6,720 | |||||||
5 | $ 840 | $ 4,200 | |||||||
Total for 13 units | $ 10,920 |
E6–2 Elmo’s Music carries a large inventory of guitars and other musical instruments. The store uses...
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