Question

Perpetual Inventory Using FIFO

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

Apr. 1		Inventory	44 units @ $98
10		Sale	29 units
15		Purchase	21 units @ $103
20		Sale	22 units
24		Sale	9 units
30		Purchase	20 units @ $108

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					$			$

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

1) Statement of cost of merchandise sold

Date	Quantity purchase	Purchase unit cost	Total Purchase	Quantity sold	Unit cost	Cost of goods sold	Quantity on hand	Unit cost	Ending inventory
Apr 1							44	98	4312
Apr 10				29	98	2842	15	98	1470
Apr 15	21	103	2163				15 21	98 103	1470 2163
Apr 20				15 7	98 103	1470 721	14	103	1442
Apr 24				9	103	927	5	103	515
Apr 30	20	108	2160				5 20	103 108	515 2160
Apr 30	Balance					5960			2675

b) Based upon preceding data inventory would be lower under Last in first out method