Question

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?

Answer 1

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