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Chapter 7 Homework Assignment (part 1)

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Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

Inventory		Purchases		Sales
May 1	3,100 units at $20	May 10	1,550 units at $22	May 12	2,170 units
		May 20	1,395 units at $24	May 14	1,860 units
				May 31	930 units

Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out 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 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 Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Schedule of Cost of Merchandise Sold
FIFO Method
Prepaid Cell Phones
Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
May 1								$	$
May 10		$	$
May 12					$	$
May 14
May 20
May 31
May 31	Balances					$			$

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Answer 1

Schedule of Cost of Merchandise Sold
FIFO Method
Prepaid Cell Phones
Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
1-May	3100	20	62000				3100	20	62000
10-May	1550	22	34100				3100	20	62000
							1550	22	34100
12-May				2170	20	43400	930	20	18600
							1550	22	34100
14-May				930	20	18600	620	22	13640
				930	22	20460
20-May	1395	24	33480				620	22	13640
							1395	24	33480
31-May				620	22	13640	1085	24	26040
				310	24	7440
31-May	Balances						1085	24	26040