Question

Perpetual Inventory Using FIFO

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

Apr. 1		Inventory	74 units @ $87
10		Sale	55 units
15		Purchase	43 units @ $91
20		Sale	24 units
24		Sale	21 units
30		Purchase	28 units @ $96

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.

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

Answer 1

Under FIFO method ,units acquired first are sold first so ending inventory is left from purchase made at last.

Date	Quantity purchased	Purchases unit cost	Purchases total cost	Quantity Cost of Merchandise Sold	cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory unit cost	Inventory Total cost
Apr 1							74	87	6438
Apr 10				55	87	4785	74-55 sold= 19	87	1653
Apr 15	43	91	3913				19	87	1653
							43	91	3913
Apr 20				19	87	1653
				24-19=5	91	455	43-5= 38	91	3458
APr 24				21	91	1911	38-21=17	91	1547
Apr 30	28	96	2688				17	91	1547
							28	96	2688
Total						8804

Cost of goods sold = 8804

Ending inventory : Inventory as on April 30= 1547 +2688 = 4235