Question

LIFO Perpetual Inventory

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

Date		Transaction	Number of Units		Per Unit		Total
Apr. 3		Inventory	42		$300		$12,600
8		Purchase	84		360		30,240
11		Sale	56		1,000		56,000
30		Sale	35		1,000		35,000
May 8		Purchase	70		400		28,000
10		Sale	42		1,000		42,000
19		Sale	21		1,000		21,000
28		Purchase	70		440		30,800
June 5		Sale	42		1,050		44,100
16		Sale	56		1,050		58,800
21		Purchase	126		480		60,480
28		Sale	63		1,050		66,150

Required:

1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

Dunne Co. Schedule of Cost of Goods Sold LIFO 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, the total cost of goods sold, and the gross profit from sales for the period.

Total sales	$
Total cost of goods sold	$
Gross profit from sales	$

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

Answer 1

Solution:

Part 1 –

Under perpetual inventory system, the inventories are updated regularly after each transaction. In LIFO method the unit purchased recently or latest are sold first.

Perpetual LIFO:	Purchases			Cost of Goods Sold			Inventory Balance
	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr.3 Beginning							42	$300	$12,600
Apr.8 Purchase	84	$360	$30,240				84	$360	$30,240
							126		$42,840
Apr.11 Sale				56	$360	$20,160	42	$300	$12,600
							28	$360	$10,080
							70		$22,680
Apr.30 Sale				28	$360	$10,080	35	$300	$10,500
				7	$300	$2,100
				35		$12,180
May.8 Purchase	70	$400	$28,000				35	$300	$10,500
							70	$400	$28,000
							105		$38,500
May.10 Sale				42	$400	$16,800	35	$300	$10,500
							28	$400	$11,200
							63		$21,700
May.19 Sale				21	$400	$8,400	35	$300	$10,500
							7	$400	$2,800
							42		$13,300
May.28 Purchases	70	$440	$30,800				35	$300	$10,500
							7	$400	$2,800
							70	$440	$30,800
							112		$44,100
June.5 Sale				42	$440	$18,480	35	$300	$10,500
							7	$400	$2,800
							28	$440	$12,320
							70		$25,620
June.16 Sale				28	$440	$12,320	14	$300	$4,200
				7	$400	$2,800
				21	$300	$6,300
				56		$21,420
June.21 Purchase	126	$480	$60,480				14	$300	$4,200
							126	$400	$50,400
							140		$54,600
June.28 Sale				63	$480	$30,240	14	$300	$4,200
							63	$480	$30,240
							77		$34,440
June.30 Balances						$127,680	672		$34,440

Part 2 –

Total Sales (Refer note 1)	$323,050
Total cost of goods sold	$127,680
Gross Profit from sales	$195,370

Note 1 – Total Sales

Unit Sold	Unit Selling Price	Total Sales
56	$1,000	$56,000
35	$1,000	$35,000
42	$1,000	$42,000
21	$1,000	$21,000
42	$1,050	$44,100
56	$1,050	$58,800
63	$1,050	$66,150
Total		$323,050

Part 3 – Ending Inventory as of June 30

77 Units and Value is $34,440

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