Question

Perpetual Inventory Using FIFO

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

Inventory		Purchases		Sales
May 1	1,600 units at $26	May 10	800 units at $28	May 12	1,120 units
		May 20	720 units at $30	May 14	960 units
				May 31	480 units

Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out 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 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 Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Schedule of Cost of Merchandise Sold

FIFO Method

Prepaid Cell Phones

Answer 1

Prepaid Cell Phones
Date	Purchases	Cost of Merchandise Sold	Inventory
Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
May 1							1600	26	41600
10	800	28	22400				1600	26	41600
							800	28	22400
						Balance	2400		64000
12				1120	26	29120	480	26	12480
							800	28	22400
						Balance	1280		34880
14				480	26	12480	320	28	8960
				480	28	13440
20	720	30	21600				320	28	8960
							720	30	21600
						Balance	1040		30560
31				320	28	8960	560	30	16800
				160	30	4800
Balances						68800	560	30	16800