Question

FIFO Perpetual Inventory

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	48		$525		$25,200
8		Purchase	96		630		60,480
11		Sale	64		1,750		112,000
30		Sale	40		1,750		70,000
May 8		Purchase	80		700		56,000
10		Sale	48		1,750		84,000
19		Sale	24		1,750		42,000
28		Purchase	80		770		61,600
June 5		Sale	48		1,840		88,320
16		Sale	64		1,840		117,760
21		Purchase	144		840		120,960
28		Sale	72		1,840		132,480

Required:

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.

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

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD
	RECIEPTS			COST OF GOODS SOLD			BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
3-Apr							48	525	25200
8-Apr	96	630	60480				48	525	25200
							96	620	60480
11-Apr				48	525	25200
				16	620	9920	80	620	49600
30-Apr				40	620	24800	40	620	24800
8-May	80	700	56000				40	620	24800
							80	700	56000
10-May				40	620	24800
				8	700	5600	72	700	50400
19-May				24	700	16800	48	700	33600
28-May	80	770	61600				48	700	33600
							80	770	61600
5-Jun				48	700	33600	80	770	61600
16-Jun				64	770	49280	16	770	12320
21-Jun	144	840	120960				16	770	12320
							144	840	120960
28-Jun				16	770	12320
				56	840	47040	88	840	73920
TOTAL	400		299040	360		249360	88		73920
Total Sales					646560
(112000+70000+84000+42000+88320+117760+132480)
Total cost of goods sold					249360
Journal entry:
Accounts receivable Account Dr.				646560
Sales revenue Account					646560
Cost of goods sold Account Dr.				249360
Inventory Account					249360
Req:
Gross profitt:
Total sales			646560
Less: COGS			249360
Gross profitt:			397200
Req
Ending inventory: 73920
Req
Lower, the invnentory under LIFO will be lower.