Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 59 units @ $62 10 Sale 44 units 15 Purchase 33 units @ $66 20 Sale 23 units 24 Sale 11 units 30 Purchase 20 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 Cost of Merchandise 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

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	Purchase			Cost of goods sold			Inventory
Date	Unit	Rate	Total cost	Unit	Rate	Total cost	Unit	Rate	Total cost
Beginning							59	$         62	$    3,658
Apr 10				44	$         62	$    2,728	15	$         62	$       930
Apr 10 Inventory							15	$         62	$       930
Apr 15	33	$         66	$    2,178				15	$         62	$       930
							33	$         66	$    2,178
Apr 20				15	$         62	$       930
				8	$         66	$       528	25	$         66	$    1,650
Apr 20 Inventory							25	$         66	$    1,650
Apr 24				11	$         66	$       726	14	$         66	$       924
Apr 24 Inventory							14	$         66	$       924
Apr 30	20	$         69	$    1,380				14	$         66	$       924
							20	$         69	$    1,380
Ending Inventory							34		$    2,304
Cost of Goods Sold						$    4,912
Part 2
Inventory will be lower in LIFO since units in stock will be what purcahsed first and those are of lower cost than April end purchase cost