Question

Perpetual Inventory Using FIFO

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

Inventory		Purchases		Sales
May 1	2,300 units at $37	May 10	1,150 units at $39	May 12	1,610 units
		May 20	1,035 units at $41	May 14	1,380 units
				May 31	690 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					$

Answer 1

Solution:

Schedule of Cost of Goods Sold
FIFO Method
Prepaid Cell Phones
Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Goods Sold Quantity	Cost of Goods Sold Unit Cost	Cost of Goods Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
May. 1							2300	$37.00	$85,100.00
May. 10	1150	$39.00	$44,850.00				2300	$37.00	$85,100.00
							1150	$39.00	$44,850.00
May. 12				1610	$37.00	$59,570.00	690	$37.00	$25,530.00
							1150	$39.00	$44,850.00
May. 14				690	$37.00	$25,530.00	460	$39.00	$17,940.00
				690	$39.00	$26,910.00
May. 20	1035	$41.00	$42,435.00				460	$39.00	$17,940.00
							1035	$41.00	$42,435.00
May. 31				460	$39.00	$17,940.00	805	$41.00	$33,005.00
				230	$41.00	$9,430.00
May. 31	Balances					$139,380.00	805		$33,005.00