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	90		$300		$27,000
8		Purchase	180		360		64,800
11		Sale	120		1,000		120,000
30		Sale	75		1,000		75,000
May 8		Purchase	150		400		60,000
10		Sale	90		1,000		90,000
19		Sale	45		1,000		45,000
28		Purchase	150		440		66,000
June 5		Sale	90		1,050		94,500
16		Sale	120		1,050		126,000
21		Purchase	270		480		129,600
28		Sale	135		1,050		141,750

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

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
03-Apr							90	300	27000
08-Apr	180	360	64800				90	300	27000
							180	360	64800
11-Apr				90	300	27000
				30	360	10800	150	360	54000
30-Apr				75	360	27000	75	360	27000
08-May	150	400	60000				75	360	27000
							150	400	60000
10-May				75	360	27000
				15	400	6000	135	400	54000
19-May				45	400	18000	90	400	36000
28-May	150	440	66000				90	400	36000
							150	440	66000
05-Jun				90	400	36000	150	440	66000
16-Jun				120	440	52800	30	440	13200
21-Jun	270	480	129600				30	440	13200
							270	480	129600
28-Jun				30	440	13200
				105	480	50400	165	480	79200
TOTAL	750		320400	675		268200	165		79200
Sales revenue (120000+75000+90000+45000+94500+126000+141750):	692250
Req 2.
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Accounts receivable			692250
	Sales revenue				692250
	(for sales made on account)
b.	Cost of goods sold			268200
	Merchandise inventory			268200
	(for cost of goods sold)
Req 3.
Gross Profit:
Sales revenue		692250
Less: Cost of goods sold	268200
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