Perpetual Inventory Using FIFO
Beginning inventory, purchases, and sales data for portable DVD players are as follows:
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June 1
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Inventory
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69 units @ $45
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6
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Sale
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55 units
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14
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Purchase
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36 units @ $47
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19
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Sale
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23 units
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25
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Sale
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16 units
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30
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Purchase
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21 units @ $50
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The business maintains a perpetual inventory system, costing by the first-in, first-out method.
Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4.
a. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.
Cost of the Merchandise Sold Schedule
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First-in, First-out Method
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Portable DVD Players
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Date
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Quantity Purchased
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Purchases Unit Cost
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Purchases Total Cost
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Quantity Sold
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Cost of Merchandise Sold Unit Cost
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Cost of Merchandise Sold Total Cost
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Inventory Quantity
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Inventory Unit Cost
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Inventory Total Cost
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June 1
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69
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$45
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$3105
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June 6
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$
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$
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June 14
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$
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$
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June 19
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June 25
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June 30
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June 30
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Balances
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$
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$
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For June 6, it asks for quantity sold, cost of merchandise sold unit cost, cost of merchandise sold total cost, inventory quantity, inventory unit cost, inventory total cost
For June 14 it asks for quantity purchased, purchases unit cost, purchases total cost, inventory quantity, inventory unit cost, inventory total cost; then spaces under the inventory quantity, inventory unit cost and inventory total cost
For June 19, it asks for quantity sold, cost of merchandise sold unit cost, cost of merchandise sold total cost, inventory quantity, inventory unit cost, inventory total cost; then spaces under the quantity sold, cost of merchandise sold unit cost, cost of merchandise sold total cost
For June 25, it asks for quantity sold, cost of merchandise sold unit cost, cost of merchandise sold total cost, inventory quantity, inventory unit cost, inventory total cost
For June 30, it asks for quantity purchased, purchases unit cost, purchases total cost, inventory quantity, inventory unit cost inventory total costJune 30 balances for cost of merchandise sold total cost and inventory total cost
b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?