Question

Perpetual Inventory Using LIFO

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

Inventory		Purchases		Sales
May 1	3,800 units at $29	May 10	1,900 units at $31	May 12	2,660 units
		May 20	1,710 units at $33	May 14	2,280 units
				May 31	1,140 units

a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

Schedule of Cost of Merchandise Sold
LIFO Method
Prepaid Cell Phones
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
May 1								$	$
May 10		$	$
May 12					$	$
May 14
May 20
May 31
May 31	Balances					$			$

Answer 1

Solution

LIFO METHOD
		PURCHASES			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	Quantity Purchasd	Purchase unit cost	Purchase Total Cost	Quantity Sold	Cost of merchandise Sold unit cost	Cost of merchandise Sold Total cost	Inventory Qunatity	Inventory unit cost	Inventory Total cost
May, 01	Beginning inventory							3800	$                     29	$110,200
May, 10	Purchase	1900	$ 31	$58,900				3800	$                     29	$110,200
								1900	$ 31	$58,900
May , 12	Sales				1900	$ 31	$58,900
					760	$ 29	$22,040	3040	$                     29	$88,160
May , 14	Sales				2280	$ 29	$66,120	760	$                     29	$22040
May, 20	Purchase	1710	$ 33	$56,430				760	$                     29	$22,040
								1710	$ 33	$56,430
May , 31	Sales				1140	$ 33	$37,260	760	$                     29	$22,040
								570	$ 33	$18,810
		3,610		$115,330	6,080		$1,84,320	1330		$40,850

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