In: Accounting
FIFO Perpetual Inventory
The beginning inventory of merchandise at Dunne Co. and data on
purchases and sales for a three-month period ending June 30 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 merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. 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.
Dunne Co. Schedule of Cost of Merchandise Sold FIFO Method For a Three-Month Period |
|||||||||
Purchases | Cost of Merchandise 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 and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account.
Record sale | Accounts Receivable | ||
Sales | |||
Record cost | Cost of Merchandise Sold | ||
Merchandise Inventory |
3. Determine the gross profit from sales for
the period.
$
4. Determine the ending inventory cost on June
30.
$
5. Based upon the preceding data, would you
expect the inventory using the last-in, first-out method to be
higher or lower?
Lower
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD | |||||||||
RECIEPTS | COST OF GOODS SOLD | BALANCE | |||||||
DATE | UNITS | RATE | AMOUNT $ | UNITS | RATE | AMOUNT $ | UNITS | RATE | AMOUNT $ |
3-Apr | 25 | 1200 | 30000 | ||||||
8-Apr | 75 | 1240 | 93000 | 25 | 1200 | 30000 | |||
75 | 1240 | 93000 | |||||||
11-Apr | 25 | 1200 | 30000 | ||||||
15 | 1240 | 18600 | 60 | 1240 | 74400 | ||||
Aril 30 | 30 | 1240 | 37200 | 30 | 1240 | 37200 | |||
8-May | 60 | 1260 | 75600 | 30 | 1240 | 37200 | |||
60 | 1260 | 75600 | |||||||
10-May | 30 | 1240 | 37200 | ||||||
20 | 1260 | 25200 | 40 | 1260 | 50400 | ||||
19-May | 20 | 1260 | 25200 | 20 | 1260 | 25200 | |||
28-May | 80 | 1260 | 100800 | 100 | 1260 | 126000 | |||
5-Jun | 40 | 1260 | 50400 | 60 | 1260 | 75600 | |||
16-Jun | 25 | 1260 | 31500 | 35 | 1260 | 44100 | |||
21-Jun | 35 | 1264 | 44240 | 35 | 1260 | 44100 | |||
35 | 1264 | 44240 | |||||||
28-Jun | 35 | 1260 | 44100 | ||||||
9 | 1264 | 11376 | 26 | 1264 | 32864 | ||||
TOTAL | 250 | 313640 | 249 | 310776 | 26 | 1264 | 32864 | ||
Req 2: Journal entries: | |||||||||
Accounts receivable Dr. | 525250 | ||||||||
Sales revenue | 525250 | ||||||||
Cost of goods sold Dr. | 310776 | ||||||||
Merchandise inventory | 310776 | ||||||||
Req 3: | |||||||||
Gross Profit: | |||||||||
Ssales | 525250 | ||||||||
Less: Cost of g oods sold | 310776 | ||||||||
Gross Profit: | 214474 | ||||||||
Req 4: Cost of Ending Inventory: $ 32864 | |||||||||
Req 5: | |||||||||
LOWER, the cost of ending inventory will be lower in LIFO as the ccost of inventory is rising. |