Question

The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Apr. 3		Inventory	84		$525		$44,100
8		Purchase	168		630		105,840
11		Sale	112		1,750		196,000
30		Sale	70		1,750		122,500
May 8		Purchase	140		700		98,000
10		Sale	84		1,750		147,000
19		Sale	42		1,750		73,500
28		Purchase	140		770		107,800
June 5		Sale	84		1,840		154,560
16		Sale	112		1,840		206,080
21		Purchase	252		840		211,680
28		Sale	126		1,840		231,840

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 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.

Dunne Co. Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30
	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr. 3								$	$
Apr. 8		$	$
Apr. 11					$	$
Apr. 30
May 8
May 10
May 19
May 28
June 5
June 16
June 21
June 28
June 30	Balances					$			$

2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. If an amount box does not require an entry, leave it blank.

Record sale
Record cost

3. Determine the gross profit from sales for the period.
$

4. Determine the ending inventory cost as of June 30.
$

5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?

Answer 1

1	Under FIFO method,goods purchased first are sold first
			Dunne Co.
		Schedule of Cost of Goods Sold
			FIFO Method
		Purchases	Cost of goods sold	Ending inventory
	Date	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost
	Apr 3.							84	525	44100
	Apr 8.	168	630	105840				84	525	44100
								168	630	105840
	Apr 11.				112 units sold as follows:			140	630	88200
					84	525	44100	(168-28)
					28	630	17640
					(112-84)
	Apr 30.				70 units sold as follows:			70	630	44100
					70	630	44100	(140-70)
	May 8.	140	700	98000				70	630	44100
								140	700	98000
	May 10.				84 units sold as follows:			126	700	88200
					70	630	44100	(140-14)
					14	700	9800
					(84-70)
	May 19.				42 units sold as follows:			84	700	58800
					42	700	29400	(126-42)
	May 28.	140	770	107800				84	700	58800
								140	770	107800