Question

1. Perpetual Inventory Using FIFO

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

   Inventory		Purchases		Sales
   May 1	3,600 units at $32	May 10	1,800 units at $34	May 12	2,520 units
   		May 20	1,620 units at $36	May 14	2,160 units
   				May 31	1,080 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
   Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
   May 1								$	$
   May 10		$	$
   May 12					$	$
   May 14
   May 20
   May 31
   May 31	Balances					$			$

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Answer 1

Schedule of Cost of Merchandise Sold
FIFO Method
Prepaid Cell Phones
Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
May-01							3,600	$32	$115,200
May-10	1,800	$34	$61,200				3,600	$32	$115,200
							1,800	$34	$61,200
May-12				2,520	$32	$80,640	1,080	$32	$34,560
							1,800	$34	$61,200
May-14				1,080	$32	$34,560	720	$34	$24,480
				1,080	$34	$36,720
May-20	1,620	$36	$58,320				720	$34	$24,480
							1,620	$36	$58,320
May-31				720	$34	$24,480	1,260	$36	$45,360
				360	$36	$12,960
May-31	Balances		$119,520	5,760		$189,360	1,260		$45,360