Question

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable DVD players are as follows:

Apr. 1		Inventory	42 units @ $92
10		Sale	31 units
15		Purchase	22 units @ $97
20		Sale	18 units
24		Sale	10 units
30		Purchase	36 units @ $102

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.

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. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players Quantity Cost of Cost of Merchandise Sold Cost of Merchandise Sold Merchandise Sold Unit Cost Total Cost Date Quantity Purchased Purchases Unit Cost Purchases Total Cost Inventory Quantity Inventory Unit Cost 92 Inventory Total Cost 3,864 Apr. 42 $ $ Apr. $ 92 $ 2,852 92 1,012 10 Apr. 22 22 $ 97 $2,134 92 1,012 22 2,134 368 368 776 970 Apr Balances b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method? Lower

Answer 1

Answer with working is given below

Date Cost Cost of Merchandise Sold Schedule First-in, First-Out Schedule Portable DVD Players Quantity cost Cost of Cost of Purchase Inventory Inventory Quantity Purchae Merchandise Merchandise Inventory Total Unit Total purchased Unit Cost merchandise sold Unit sold Total Quantity Cost Cost sold cost Cost $92 $3,864 $92 $2,852 11 $92 $1,012 22 $97 $2,134 92 $1,012 97 $2,134 $1,012 $679 15 97 $1,455 01-Apr Opening balance 10-Apr Sale 15-Apr Purchase 20-Apr Sale $970 24-Apr Sale 30-Apr Purchase 5 5 36 $102 $3,672 97 $97 $102 $485 $485 $3,672 $4,157 30-Apr Balance $5,513 Inventory would be lower under LIFO Method