Question

Perpetual Inventory Using FIFO

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

Apr. 1		Inventory	66 units @ $63
10		Sale	43 units
15		Purchase	30 units @ $66
20		Sale	31 units
24		Sale	11 units
30		Purchase	39 units @ $69

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 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

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 sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory quantity	Inventory unit cost	Inventory total cost
Apr 1							66	63	4158
Apr 10				43	63	2709	23	63	1449
Apr 15	30	66	1980				23 30	63 66	1449 1980
Apr 20				23 8	63 66	1449 528	22	66	1452
Apr 24				11	66	726	11	66	726
Apr 30	39	69	2691				11 39	66 69	726 2691
Apr 30	Balances					5412			3417

b) Inventory will be lower under last in first out method