Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data fo
ID: 2411216 • Letter: P
Question
Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1Inventory 10 15 20 24 30 Sale Purchase Sale Sale Purchase 59 units @ $69 42 units 27 units $72 23 units 8 units 36 units @ $75 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 3. 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 First-in, First-out Method Portable DVD Date Quantity Purchased Purchases Unit Cost Purchases Total Cost Quantity Sold Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Apr. 1 Apr. 10 Apr. 15 Apr. 20 Apr. 24 Apr. 30 Apr. 30 Balances b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?Explanation / Answer
Cost of Merchanised Sold Schedule
First in,First out method
Portable DVD Players
Date
Quantity
purchased
purchase
unit cost
purchase
total cost
quantity
sold
cost
of merchandise sold unit cost
cost
of merchandise sold total cost
inventory
quantity
Inventory unit cost
Inventory
total cost
1-Apr
59
69
4071
10-Apr
42
69
2898
17
69
1173
15-Apr
27
72
1944
17
69
1173
27
72
1944
20-Apr
17
69
1173
6
72
432
21
72
1512
24-Apr
8
72
576
13
72
936
30-Apr
36
75
2700
13
72
936
36
75
2700
30-Apr
balance
5079
3636
b)
Inventory cost to be lower using LIFO. Closing Inventory units is 49 units and cost per unit is 69.
Total inventory cost is 49*69 = 3381 which is lower than FIFO method.
Cost of Merchanised Sold Schedule
First in,First out method
Portable DVD Players
Date
Quantity
purchased
purchase
unit cost
purchase
total cost
quantity
sold
cost
of merchandise sold unit cost
cost
of merchandise sold total cost
inventory
quantity
Inventory unit cost
Inventory
total cost
1-Apr
59
69
4071
10-Apr
42
69
2898
17
69
1173
15-Apr
27
72
1944
17
69
1173
27
72
1944
20-Apr
17
69
1173
6
72
432
21
72
1512
24-Apr
8
72
576
13
72
936
30-Apr
36
75
2700
13
72
936
36
75
2700
30-Apr
balance
5079
3636
b)
Inventory cost to be lower using LIFO. Closing Inventory units is 49 units and cost per unit is 69.
Total inventory cost is 49*69 = 3381 which is lower than FIFO method.
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