Question

PLEASE ONLY USE THE TABLES AND FORMAT THAT I PROVIDED

FIFO Perpetual Inventory

The beginning inventory of merchandise 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	54		$525		$28,350
8		Purchase	108		630		68,040
11		Sale	72		1,750		126,000
30		Sale	45		1,750		78,750
May 8		Purchase	90		700		63,000
10		Sale	54		1,750		94,500
19		Sale	27		1,750		47,250
28		Purchase	90		770		69,300
June 5		Sale	54		1,840		99,360
16		Sale	72		1,840		132,480
21		Purchase	162		840		136,080
28		Sale	81		1,840		149,040

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 Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Dunne Co. Schedule of Cost of Merchandise Sold FIFO Method For the three months ended May 31, 2016
	Purchases			Cost of Merchandise 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 merchandise sold for the period. Journalize the entries in the sales and cost of merchandise 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 inventory using the last-in, first-out method to be higher or lower?

Answer 1

1. ON FIFO METHOD & PERPETUAL:
	Purchase			Cost of Merchandise Sold			Inventory
Date	Qty	Unit Cost	Total Cost	Qty	Unit Cost	Total Cost	Qty	Unit cost	Total Cost
3-Apr							54	525	28350
8	108	630	68040				162	595	96390
11				72	595	42840	90	595	53550
30				45	595	26775	45	595	26775
8-May	90	700	63000				135	665	89775
10				54	665	35910	81	665	53865
19				27	665	17955	54	665	35910
28	90	770	69300				144	730.625	105210
5-Jun				54	730.625	39453.75	90	730.625	65756.25
16				72	730.625	52605	18	730.625	13151.25
21	162	840	136080				180	829.0625	149231.3
28				81	829.0625	67154.06	99	829.0625	82077.19
30							99	829.0625	82077.19
Total						282692.8
Sales revenue	(72+45+54+27)*1750 + (54+72+81)*1840=727380
2.Journal Entries:
Date	Accounts Titles	Debit	Credit
30-Jun	Accounts Receivable	727380
	Sales Revenue		727380
30-Jun	COMS	282692.8
	Inventory		282692.8
3. Gross profit = sales value - COMS = 727380-282692.80= $444687.20
4. Ending inventory cost as of June 30 = 82077.19
5. If LIFO method is used, then ending inventory would at the lower level of present level
because purchase price has been increase on every other purchase.