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LIFO Perpetual Inventory The beginning inventory at Funky Party Supplies and dat

ID: 2542997 • Letter: L

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:

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.

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

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

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

Explanation / Answer

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

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