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		$450		$21,600
8		Purchase	96		540		51,840
11		Sale	64		1,500		96,000
30		Sale	40		1,500		60,000
May 8		Purchase	80		600		48,000
10		Sale	48		1,500		72,000
19		Sale	24		1,500		36,000
28		Purchase	80		660		52,800
June 5		Sale	48		1,575		75,600
16		Sale	64		1,575		100,800
21		Purchase	144		720		103,680
28		Sale	72		1,575		113,400

Required:

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.

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.

Determine the gross profit from sales for the period

Determine the ending inventory cost as of June 30.

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

Record of Inventory using FIFO method of valuation: