Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for DVD players are as follows: November 1 Inventory 64 units at $92 10 Sale 49 units 15 Purchase 34 units at $98 20 Sale 19 units 24 Sale 19 units 30 Purchase 34 units at $103 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 : FIFO

	Purchase			Cost of goods sold			Ending inventory
Date	Unit	Unit Cost	Total Cost	Unit	Unit cost	Total cost	Unit	Unit cost	Total Cost
Nov 1							64	92	5888
Nov 10				49	92	4508	15	92	1380
Nov 15	34	98	3332				15 34	92 98	1380 3332
Nov 20				15 4	92 98	1380 392	30	98	2940
Nov 24				19	98	1862	11	98	1078
Nov 30	34	103	3502				34	103	3502
Nov 30	Balances					8142			3502

Cost of goods sold under FIFO = $8142; Ending inventory = $3502

2) Ending inventory under LIFO is lower than FIFO