FIFO Perpetual Inventory The beginning inventory of merchandise at Keats Office
ID: 2444782 • Letter: F
Question
FIFO Perpetual Inventory
The beginning inventory of merchandise at Keats Office Supplies and data on purchases and sales for a three-month period ending May 31, 2014, 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 3, using the first-in, first-out method. If units are in inventory at two different costs, enter the OLDEST units first.
2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account.
3. Determine the gross profit from sales for the period.
$
4. Determine the ending inventory cost as of May 31, 2014.
$
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
SelectHigherLowerItem 103
of Units Per Unit Total March 1 Inventory 84 $225 $18,900 10 Purchase 168 270 45,360 28 Sale 112 750 84,000 30 Sale 70 750 52,500 April 5 Purchase 140 300 42,000 10 Sale 84 750 63,000 16 Sale 42 750 31,500 28 Purchase 140 330 46,200 May 5 Sale 84 790 66,360 14 Sale 112 790 88,480 25 Purchase 252 360 90,720 30 Sale 126 790 99,540
Explanation / Answer
Keats Office Supplies Schedule of Cost of Merchandise Sold FIFO Method For the three months ended May 31, 2014 Purchases Cost of Merchandise Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Mar. 1 84 $ 225 $ 18,900 Mar. 10 168 $ 270 $ 45,360 84 $225 $18,900 168 $ 270 $45,360 Mar. 28 112 $ 750 $ 84,000 140 $750 $1,05,000 140 $750 $ 1,05,000 Mar. 30 70 $750 $52,500 210 $750 $ 1,57,500 Apr. 5 140 $300 $ 42,000 210 $750 $1,57,500 140 $300 $ 42,000 Apr. 10 84 $750 $63,000 266 $750 $1,99,500 266 $750 $1,99,500 Apr. 16 42 $750 $ 31,500 224 $750 $1,68,000 Apr. 28 140 $330 $46,200 224 $750 $1,68,000 140 $330 $ 46,200 May 5 84 $790 $66,360 280 $790 $2,21,200 May 14 112 $790 $88,480 168 $790 $1,32,720 May 25 252 $360 $90,000 168 $790 $1,32,720 420 $ 360 $1,51,200 May 30 126 $790 $99,540 294 $790 $ 2,321,260 294 $790 $2,32,260 Balances $ 1,32,720 $81,060
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