Question

Perpetual Inventory Using FIFO

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	4,000 units at $40
Apr. 19	Sale	2,500 units
June 30	Purchase	4,500 units at $44
Sept. 2	Sale	5,000 units
Nov. 15	Purchase	2,000 units at $46

The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present 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.

Schedule of Cost of Goods Sold FIFO Method
	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1							?	?	?
Apr. 19				2500	40	100,000	?	?	?
June 30	4500	44	198000				?	?	?
							?	?	?
Sept. 2				1500	?	?	?	?	?
				3500	?	?
Nov. 15	2000	46	92000				?	?	?
							?	?	?
Dec. 31	Balances					?			?

Answer 1

FIFO - Perpetual	# of units    (A)	Cost per unit	Cost of goods available for sale	# of units sold               (B)	Cost per unit	Cost of goods sold	# of units in ending inventory      (A) - (B)	Cost per unit	Ending Inventory
Jan-01							4000	$          40	$ 1,60,000
Apr-19				2500	$          40	$ 1,00,000	1500	$          40	$     60,000
Jun-30	4500	$          44	$ 1,98,000				1500	$          40	$     60,000
							4500	$          44	$ 1,98,000
Sep-02				1500	$          40	$     60,000	1000	$          44	$     44,000
				3500	$          44	$ 1,54,000
Nov-15	2000	$          46	$     92,000				1000	$          44	$     44,000
							2000	$          46	$     92,000
Total	6500		$ 2,90,000	7500		$ 3,14,000	3000		$ 1,36,000