Question

Perpetual Inventory Using LIFO

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

Inventory		Purchases		Sales
May 1	3,500 units at $38	May 10	1,750 units at $40	May 12	2,450 units
		May 20	1,575 units at $42	May 14	2,100 units
				May 31	1,050 units

a. Assuming that the perpetual inventory system is used, costing by the LIFO 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 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

Answer 1

	PURCHASE	COST OF GOODS SOLD	INVENTORY AT END
	# of units	unit cost	Total	# of units	unit cost	Total	# of units	unit cost	Total
May 1							3500	38	133000
May 10	1750	40	70000				3500	38	133000
							1750	40	70000
May 12				1750	40	70000
				700	38	26600	3500-700= 2800	38	106400
May 14				2100	38	79800	2800-2100=700	38	26600
May 20	1575	42	66150				700	38	26600
							1575	42	66150
May 31				1050	42	44100	700	38	26600
							1575-1050=525	42	22050

	cost of goods sold	Inventory
May 12	70000+26600= 96600	106400
May 14	79800	26600
May 31	44100	26600+22050= 48650