Question

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May 1 3,100 units at $34 May 10 1,550 units at $36 May 20 1,395 units at $38 May 12 May 14 May 31 2,170 units 1,860 units 930 units 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 Sold LIFO Method Prepaid Cell Phones

Answer 1

Schedule of cost of merchandise sold

last in First out

Prepaid cell phones

Date	quantity purchase	Purchase unit cost	Purchase total Cost	Quantity cost of merchandise sold	Cost of merchandise sold unit cost	Cost of merchandise sold	Inventory quantity	Inventory unit cost	Inventory total Cost
May 1							3100	34	105400
May 10	1550	36	55800				3100 1550	34 36	105400 55800
May 12				1550 620	36 34	55800 21080	2480	34	84320
May 14				1860	34	63240	620	34	21080
May 20	1395	38	53010				620 1395	34 38	21080 53010
May 30				930	38	35340	620 465	34 38	21080 17670
May 31	Balance					175460			38750

b) Ending inventory will be higher under first in first out method