Question

In: Accounting

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for DVD players are as follows:...

Perpetual Inventory Using FIFO

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

November 1 Inventory 37 units at $64
10 Sale 29 units
15 Purchase 18 units at $68
20 Sale 13 units
24 Sale 9 units
30 Purchase 27 units at $72

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

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

Cost of the Goods Sold Schedule
First-in, First-out Method
DVD Players



Date

Quantity
Purchased

Purchases
Unit Cost

Purchases
Total Cost

Quantity
Sold
Cost of
Goods Sold
Unit Cost
Cost of
Goods Sold
Total Cost

Inventory
Quantity

Inventory
Unit Cost

Inventory
Total Cost
Nov. 1
Nov. 10
Nov. 15
Nov. 20
Nov. 24
Nov. 30
Nov. 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?

Solutions

Expert Solution

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

Cost of the Goods Sold Schedule
First-in, First-out Method
DVD Players



Date

Quantity
Purchased

Purchases
Unit Cost

Purchases
Total Cost

Quantity
Sold
Cost of
Goods Sold
Unit Cost
Cost of
Goods Sold
Total Cost

Inventory
Quantity

Inventory
Unit Cost

Inventory
Total Cost
Nov. 1 37 64 2368
Nov. 10 29 64 1856 8 64 512
Nov. 15 18 68 1224 8 64 512
18 68 1224
Nov. 20 8 64 512
5 68 340 13 68 884
Nov. 24 9 68 612 4 68 272
Nov. 30 27 72 1944 4 68 272
27 72 1944
Nov 30 Balance 3320 31 2216

b) Ending inventory would be lower if last in first out method used


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