Question

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	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 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 June 30
	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	Accounts Receivable
	Sales
Record cost	Cost of Merchandise Sold
	Merchandise Inventory

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 methodto be higher or lower?
Lower

Answer 1