Question

Perpetual Inventory Using FIFO

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

November 1		Inventory	40 units at $65
10		Sale	32 units
15		Purchase	19 units at $69
20		Sale	13 units
24		Sale	9 units
30		Purchase	24 units at $73

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

a. Determine the cost of the goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. 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.

Cost of the Goods Sold Schedule
First-in, First-out Method
DVD Players
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Goods Sold Unit Cost	Cost of Goods Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
Nov. 1								$	$
Nov. 10					$	$
Nov. 15		$	$
Nov. 20
Nov. 24
Nov. 30
Nov. 30	Balances					$			$

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

Answer 1

a) Schedule :

Date	Quantity Purchased	Purchase unit cost	Purchase total cost	Quantity sold	Cost of Goods Sold Unit Cost	Cost of goods sold total cost	Inventory Quantity	Inventory unit cost	Inventory total cost
Nov 1							40	65	2600
Nov 10				32	65	2080	8	65	520
Nov 15	19	69	1311				8 19	65 69	520 1311
Nov 20				8 5	65 69	520 345	14	69	966
Nov 24				9	69	621	5	69	345
Nov 30	24	73	1752				5 24	69 73	345 1752
TOtal						3566			2097

b) Based upon the preceding data, Inventory would be lower using Last in first out method.