Question

In: Accounting

LIFO Perpetual Inventory The beginning inventory at Funky Party Supplies and data on purchases and sales...

LIFO Perpetual Inventory

The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period are as follows:

Date Transaction Number
of Units
Per Unit Total
Jan. 1 Inventory 2,500 $60.00 $150,000
10 Purchase 7,500 68.00 510,000
28 Sale 3,750 120.00 450,000
30 Sale 1,250 120.00 150,000
Feb. 5 Sale 500 $120.00 $60,000
10 Purchase 18,000 70.00 1,260,000
16 Sale 9,000 125.00 1,125,000
28 Sale 8,500 125.00 1,062,500
Mar. 5 Purchase 15,000 71.60 1,074,000
14 Sale 10,000 125.00 1,250,000
25 Purchase 2,500 72.00 180,000
30 Sale 8,750 125.00 1,093,750

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, 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 Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Round unit cost to two decimal places, if necessary.

Funky Party Supplies
Schedule of Cost of Merchandise Sold
LIFO Method
For the three months ended March 31, 2016
Purchases Cost of Merchandise Sold Inventory
Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Jan. 1 $ $
Jan. 10 $ $
Jan. 28 $ $
Jan. 30
Feb. 5
Feb. 10
Feb. 16
Feb. 28
Mar. 5
Mar. 14
Mar. 25
Mar. 30
Mar. 31 Balances $ $

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

Total sales $
Total cost of merchandise sold $
Gross profit from sales $

3. Determine the ending inventory cost as of March 31, 2016.
$

Solutions

Expert Solution

Calculate cost of goods sold and ending inventory under LIFO perpetual method :

Purchase Cost of goods sold Inventory
Date Qty Unit cost Total cost Qty unit cost Total cost Qty Unit cost Total cost
Jan 1 2500 60 150000
Jan 10 7500 68 510000

2500

7500

60

68

150000

510000

Jan 28 3750 68 255000

2500

3750

60

68

150000

255000

Jan 30 1250 68

85000

2500

2500

60

68

150000

170000

Feb 5 500 68 34000

2500

2000

60

68

150000

136000

Feb 10 18000 70 1260000

2500

2000

18000

60

68

70

150000

136000

1260000

Feb 16 9000 70 630000

2500

2000

9000

60

68

70

150000

136000

630000

Feb 28 8500 70 595000

2500

2000

500

60

68

70

150000

136000

35000

Mar 5 15000 71.60 1074000

2500

2000

500

15000

60

68

70

71.60

150000

136000

35000

1074000

Mar 14 10000 71.60 716000

2500

2000

500

5000

60

68

70

71.60

150000

136000

35000

358000

Mar 25 2500 72 180000

2500

2000

500

5000

2500

60

68

70

71.60

72

150000

136000

35000

358000

180000

Mar 30

2500

5000

500

1250

72

71.60

70

68

180000

358000

35000

85000

2500

750

60

68

150000

51000

Balance 2973000 201000

2) Total sales = 5191250

Cost of merchandise sold = 2973000

Gross profit = 2218250

3) Ending inventory = 201000


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