Question

1. LIFO Perpetual Inventory

   The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows:

   Date		Transaction	Number of Units		Per Unit		Total
   Apr. 3		Inventory	25		$1,200		$30,000
   8		Purchase	75		1,240		93,000
   11		Sale	40		2,000		80,000
   30		Sale	30		2,000		60,000
   May 8		Purchase	60		1,260		75,600
   10		Sale	50		2,000		100,000
   19		Sale	20		2,000		40,000
   28		Purchase	80		1,260		100,800
   June 5		Sale	40		2,250		90,000
   16		Sale	25		2,250		56,250
   21		Purchase	35		1,264		44,240
   28		Sale	44		2,250		99,000

   Required:

   1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

   Dunne Co. Schedule of Cost of Goods Sold LIFO 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, the total cost of goods sold, and the gross profit from sales for the period.

   Total sales	$
   Total cost of goods sold	$
   Gross profit	$

   3. Determine the ending inventory cost on June 30.
   $

   Feedback

   1. When the perpetual inventory system is used, revenue is recorded each time a sale is made along with an entry to record the cost of the goods sold. LIFO means the last units purchased are assumed to be the first to be sold. Therefore after each sale, the remaining or ending inventory is made up of the first or earliest purchases. Think of your inventory in terms of "layers." The first sale comes from the most recent purchase layer. When deciding which layer to use for costing of each sale ask yourself: "Is there enough inventory left in the most recent purchase to cover the sale?" If not, the other units sold should be taken from the second most recent purchase layer, which then contains the most recent costs. Continue this process for each transaction. If you have done this problem correctly, the remaining units making up ending inventory will be costed at the April 3 beginning inventory and the May 28 unit purchase price.

   2. Total sales are obtained by taking the number of units sold times their sale prices for all sales and adding these amounts together. The total cost of goods sold can be obtained by adding the LIFO costs in the perpetual inventory record. Sales minus cost of goods sold equals gross profit.

   3. The ending inventory is what is left after subtracting the cost of goods sold from the goods available for sale. Multiply the units remaining after the last sale by their corresponding earliest layer cost to determine the LIFO cost of the ending inventory.

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Answer 1

Dunne Co. Schedule of Cost of Goods Sold LIFO 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							25	$1200	$30000
Apr. 8	75	$1240	$93000				25	$1200	$30000
							75	$1240	93000
Apr. 11				40	$1240	$49600	25	$1200	$30000
							35	$1240	43400
Apr. 30				30	$1240	$37200	25	$1200	$30000
							5	$1240	6200
May 8	60	$1260	$75600				25	$1200	$30000
							5	$1240	6200
							60	$1260	75600
May 10				50	$1260	$63000	25	$1200	$30000
							5	$1240	6200
							10	$1260	12600
May 19				10	$1260	$12600
				5	$1240	$6200
				5	$1200	$6000	20	$1200	$24000
May 28	80	$1260	$100800				20	$1200	$24000
							80	$1260	100800
June 5				40	$1260	$50400	20	$1200	$24000
							40	$1260	50400
June 16				25	$1260	$31500	20	$1200	$24000
							15	$1260	18900
June 21	35	$1264	$44240				20	$1200	$24000
							15	$1260	18900
							35	$1264	44240
June 28				35	$1264	$44240	20	$1200	$24000
				9	$1260	$11340	6	$1260	7560
June 30	Balances					$312080			$31560

2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.

Total sales= $(80000+60000+100000+40000+90000+56250+99000)= $525250

Total sales	$525250
Total cost of goods sold	(312080)
Gross profit	$213170

3. Determine the ending inventory cost on June 30.
$31560