Question

Perpetual Inventory Using FIFO

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

November 1		Inventory	55 units at $82
10		Sale	45 units
15		Purchase	31 units at $87
20		Sale	14 units
24		Sale	13 units
30		Purchase	24 units at $91

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)FIFO METHOD INVENTORY SCHEDULE

Date	Qty Purchased	Unit Cost	Total Cost	Qty Sold	Unit cost	Cost of goods sold	Ending Inv.Qty	Unit Cost	Total Inventory
Nov 1							55	82	4510
Nov 10				45	82	3690	10	82	820
Nov 15	31	87	2697				10	82	820
							31	87	2697
Nov 20				10	82	820	27	87	2349
				4	87	348
Nov 24				13	87	1131	14	87	1218
Nov 31	24	91	2184				14	87	1218
							24	91	2184
TOTAL						5989			3402

Total Cost of goods sold        =        $5,989

Ending Inventory Balance    =       $3,402

  

LIFO METHOD INVENTORY SCHEDULE

Date	Qty Purchased	Unit Cost	Total Cost	Qty Sold	Unit cost	Cost of goods sold	Ending Inv.Qty	Unit Cost	Total Inventory
Nov 1							55	82	4510
Nov 10				45	82	3690	10	82	820
Nov 15	31	87	2697				10	82	820
							31	87	2697
Nov 20				14	87	1218	10	82	820
							17	87	1479
Nov 24				13	87	1131	10	82	820
							4	87	348
Nov 31	24	91	2184				10	82	820
							4	87	348
							24	91	2184
TOTAL						6039			3352

Total Cost of goods sold        =        $6,039

Ending Inventory Balance    =       $3,352

(b)Based upon the given data’s, We are expecting the ending inventory under LIFO method to be lower than the FIFO Method

Ending Inventory under FIFO = $3,402

Ending Inventory under LIFO = $3,352

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ALL THE BEST !!!