Question

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.
$

Answer 1

As per given data, question is to be answered as per LIFO (LAST IN FIRST OUT) Method.

The LIFO method operates under the assumption that the last item of inventory purchased is the first one sold. Based on this assumption answer to the first question is as follows ;

Funky Party Supplies Schedule of Cost of Merchandise Sold LIFO Method For the three months ended March 31, 2016
Date	Purchases			Cost of Merchandise Sold			Inventory
	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan-01							2500	$     60.00	$      150,000.00
Jan-10	7500	$    68.00	$      510,000.00				2500	$     60.00	$      150,000.00
							7500	$     68.00	$      510,000.00
Jan-28				3750	$ 120.00	$      450,000.00	2500	$     60.00	$      150,000.00
							3750	$     68.00	$      255,000.00
Jan-30				1250	$ 120.00	$      150,000.00	2500	$    60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
Feb-05				500	$ 120.00	$        60,000.00	2500	$     60.00	$      150,000.00
							2000	$     68.00	$      136,000.00
Feb-10	18000	$    70.00	$ 1,260,000.00				2500	$     60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
							18000	$     70.00	$ 1,260,000.00
Feb-16				9000	$ 125.00	$ 1,125,000.00	2500	$     60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
							9000	$     70.00	$      630,000.00
Feb-28				8500	$ 125.00	$ 1,062,500.00	2500	$     60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
							500	$     70.00	$        35,000.00
Mar-05	15000	$    71.60	$ 1,074,000.00				2500	$     60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
							500	$     70.00	$        35,000.00
							15000	$     71.60	$ 1,074,000.00
Mar-10				10000	125	$ 1,250,000.00	2500	$     60.00	$      150,000.00
							2500	$    68.00	$      170,000.00
							500	$     70.00	$        35,000.00
							5000	$     71.60	$      358,000.00
Mar-25	2500	72	$      180,000.00				2500	$     60.00	$      150,000.00
							2500	$     68.00	$      170,000.00
							500	$     70.00	$        35,000.00
							5000	$     71.60	$      358,000.00
							2500	$     72.00	$      180,000.00
Mar-30				8750	125	$ 1,093,750.00	2500	$     60.00	$      150,000.00
							1750	$     68.00	$      119,000.00
Mar-31	Balances					$ 5,191,250.00			$      269,000.00

2. Answer to the second question is as follows;

Total Sales $ 5,191,250
Total Cost of Merchandise Sold $ 2,939,000
Gross Profit from Sales $ 2,252,250

3. Answer to the third question is as follows ;

Ending Inventory as on March 31, 2016 is $ 269,000