Question

Perpetual Inventory Using FIFO

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

Apr. 1		Inventory	40 units @ $83
10		Sale	29 units
15		Purchase	23 units @ $87
20		Sale	16 units
24		Sale	11 units
30		Purchase	21 units @ $91

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.

Answer 1

Ans.	FIFO Perpetual:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	40	$83.00	$3,320				40	$83.00	$3,320
	10-Jan				29	$83.00	$2,407	11	$83.00	$913
	15-Jan	23	$87.00	$2,001				11	$83.00	$913
								23	$87.00	$2,001
	20-Jan				11	$83.00	$913
					5	$87.00	$435	18	$87.00	$1,566
	24-Jan				11	$87.00	$957	7	$87.00	$609
	30-Jan	21	$91.00	$1,911				7	$87.00	$609
								21	$91.00	$1,911
	Total				Cost of goods sold		$4,712	Cost of Ending inventory		$2,520
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.