Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 36 units @ $45 10 Sale 30 units 15 Purchase 17 units @ $47 20 Sale 12 units 24 Sale 8 units 30 Purchase 40 units @ $49 The business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. a. 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. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players 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 Apr. 1 $ $ Apr. 10 $ $ Apr. 15 $ $ Apr. 20 Apr. 24 Apr. 30 Apr. 30 Balances $ $ b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable DVD players are as follows:

Apr. 1		Inventory	36 units @ $45
10		Sale	30 units
15		Purchase	17 units @ $47
20		Sale	12 units
24		Sale	8 units
30		Purchase	40 units @ $49

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3.

a. 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.

Cost of the Merchandise Sold Schedule
First-in, First-out Method
Portable DVD Players
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
Apr. 1								$	$
Apr. 10					$	$
Apr. 15		$	$
Apr. 20
Apr. 24
Apr. 30
Apr. 30	Balances					$			$

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

Answer 1

FIFO :-

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
Apr. 1	-	-	-	-	-	-	36	45	1620
Apr. 10	-	-	-	30	45	1350	6	45	324
Apr. 15	17	47	799	-	-	-	6	45	324
	-	-	-	-	-	-	17	47	799
Apr. 20	-	-	-	6	45	270	-	-	-
	-	-	-	6	47	282	11	47	517
Apr. 24	-	-	-	8	47	376	3	47	141
Apr. 30	40	49	1960	-	-	-	3	47	141
							40	49	1960
Apr. 30	Balances					2278			2101

Inventory should be lower using LIFO method, Because in LIFO last purchase is first sale. The purchase price of units last purchases are higher than the units purchases earlier. Inventory consists the units that purchases earlier with lower cost.

We can explain this with the illustrative example as below

This is not the part of this question

LIFO :-

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
Apr. 1	-	-	-	-	-	-	36	45	1620
Apr. 10	-	-	-	30	45	1350	6	45	324
Apr. 15	17	47	799	-	-	-	6	45	324
	-	-	-	-	-	-	17	47	799
Apr. 20	-	-	-	12	47	564	6	45	324
	-	-	-				5	47	235
Apr. 24	-	-	-	5	47	235	3	45	135
				3	45	135
Apr. 30	40	49	1960	-	-	-	3	45	135
							40	49	1960
Apr. 30	Balances					2284			2095