Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data fo

Question

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for DVD players are as follows:

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

a. Determine the cost of the goods sold for each sale and the inventory balance after each sale, presenting 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.

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

November 1 Inventory 40 units at $65 10 Sale 32 units 15 Purchase 19 units at $69 20 Sale 13 units 24 Sale 9 units 30 Purchase 24 units at $73

Explanation / Answer

a) Schedule :

8

19

65

69

520

1311

8

5

65

69

520

345

5

24

69

73

345

1752

b) Based upon the preceding data, Inventory would be lower using Last in first out method.

Date Quantity Purchased Purchase unit cost Purchase total cost Quantity sold Cost of Goods Sold Unit Cost Cost of goods sold total cost Inventory Quantity Inventory unit cost Inventory total cost Nov 1 40 65 2600 Nov 10 32 65 2080 8 65 520 Nov 15 19 69 1311

8

19

65

69

520

1311

Nov 20

8

5

65

69

520

345

14 69 966 Nov 24 9 69 621 5 69 345 Nov 30 24 73 1752

5

24

69

73

345

1752

TOtal 3566 2097

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