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FIFO Perpetual Inventory The beginning inventory of merchandise at Dunne Co. and data on purchases and...

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

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