Question

LIFO 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	42		$375		$15,750
8		Purchase	84		450		37,800
11		Sale	56		1,250		70,000
30		Sale	35		1,250		43,750
May 8		Purchase	70		500		35,000
10		Sale	42		1,250		52,500
19		Sale	21		1,250		26,250
28		Purchase	70		550		38,500
June 5		Sale	42		1,315		55,230
16		Sale	56		1,315		73,640
21		Purchase	126		600		75,600
28		Sale	63		1,315		82,845

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, 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.

Dunne Co. Schedule of Cost of Merchandise Sold LIFO Method For the three-months ended June 30
	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, the total cost of merchandise sold, and the gross profit from sales for the period.

Total sales	$
Total cost of merchandise sold
Gross profit	$

3. Determine the ending inventory cost on June 30.
$

Answer 1

LIFO method assumes that goods received later are sold first

perpetual method calculates inventory after every transaction and not only at the end of period(month or year)

Dunne Co. Schedule of Cost of Merchandise Sold LIFO Method For the three-months ended June 30
	Purchases	Cost of Merchandise Sold	Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr. 3	42	$375	$15,750				42	$375	$15,750
Apr. 8	84	$450	$37,800				42	$375	$15,750
84	$450	$37,800
Apr. 11				56	$450	$25,200[56*$450]	42	$375	$15,750
28[84-56]	$450	$12,600
Apr. 30				28	$450	$12,600 [28*450]	35[42-7]	$375	$13,125
7[35-28]	$375	$2,625 [7*375]
May 8	70	$500	$35,000				35	$375	$13,125
70	$500	$35,000
May 10				42	$500	$21,000	35	$375	$13,125
28[70-42]	$500	$14,000
May 19				21	$500	$10,500	35	$375	$13,125
7	$500	$3,500
May 28	70	$550	$38,500				35	$375	$13,125
7	$500	$3,500
70	$550	$38,500
June 5				42	$550	$23,100	35	$375	$13,125
7	$500	$3,500
[70-42]28	$550	$15,400
June 16				28	$550	$15,400	14[35-21]	$375	$5,250
7	$500	$3,500
21[56-28-7]	$375	$7,875
June 21	126	$600	$75,600				14	$375	$5,250
126	$600	$75,600
June 28				63	$600	$37,800	14	$375	$5,250
63[126-63]	$600	$37,800
June 30						$159,600	77		$43,050[$5,250+37,800]

2.

Total sales	$404,215[$70,000+43,750+52,500+26,250+55,230+73,640+82,845]
Total cost of merchandise sold	$159,600
Gross profit	$244,615

3.ending inventory ciost as on June 30 is $43,050 as can be seen from above

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