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	66		$300		$19,800
8		Purchase	132		360		47,520
11		Sale	88		1,000		88,000
30		Sale	55		1,000		55,000
May 8		Purchase	110		400		44,000
10		Sale	66		1,000		66,000
19		Sale	33		1,000		33,000
28		Purchase	110		440		48,400
June 5		Sale	66		1,050		69,300
16		Sale	88		1,050		92,400
21		Purchase	198		480		95,040
28		Sale	99		1,050		103,950

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

Dunne Co. Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30
	Purchases			Cost of Goods 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 goods sold for the period. Journalize the entries in the sales and cost of goods 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 ending inventory using the last-in, first-out method to be higher or lower?

Answer 1

q1
Dunne Co.
Schedule of Cost of Goods Sold
FIFO Method
For the Three Months Ended June 30
	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr. 3							$       66	$       300	$     19,800
Apr. 8	$       132	$       360	$     47,520				$       66	$       300	$     19,800
							$      132	$       360	$     47,520
Apr. 11				$       66	$       300	$     19,800	$      110	$       360	$     39,600
				$       22	$       360	$      7,920
Apr. 30				$       55	$       360	$     19,800	$       55	$       360	$     19,800
May 8	$       110	$       400	$     44,000				$       55	$       360	$     19,800
							$      110	$       400	$     44,000
May 10				$       55	$       360	$     19,800	$       99	$       400	$     39,600
				$       11	$       400	$      4,400
May 19				$       33	$       400	$     13,200	$       66	$       400	$     26,400
May 28	$       110	$       440	$     48,400				$       66	$       400	$     26,400
							$      110	$       440	$     48,400
5-Jun				$       66	$       400	$     26,400	$      110	$       440	$     48,400
June 16				$       88	$     1,050	$     92,400	$       22	$       440	$      9,680
June 21	$       198	$       480	$     95,040				$       22	$       440	$      9,680
							$      198	$       480	$     95,040
June 28				$       22	$       440	$      9,680	$      121	$       480	$     58,080
				$       77	$       480	$     36,960
June 30	Balances					$   250,360	$      121	$       480	$     58,080
Q2	Debit	Credit				Sales
Sales Revenue	$ 507,650					Quantity	Unit Cost	Total Cost
Accounts receivable		$ 507,650				$           66	$   1,000	$ 66,000
(To record sales)						$           22	$   1,000	$ 22,000
Cost of goods sold	$ 250,360					$           55	$   1,000	$ 55,000
Finished goods		$ 250,360				$           55	$   1,000	$ 55,000
						$           11	$   1,000	$ 11,000
						$           33	$   1,000	$ 33,000
						$           66	$   1,050	$ 69,300
						$           88	$   1,050	$ 92,400
						$           99	$   1,050	$ 103,950
						Total		$ 507,650
Q3
Sales	$ 507,650
Cost of goods sold	$ 250,360
	$ 257,290
Q4
Ending inventory	$    58,080
Q5
Inventory will be lower as higher priced inventory will be sold first.