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

Question

Perpetual Inventory Using LIFO

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

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

Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 5. 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.

June 1 Inventory 240 units at $78 10 Sale 180 units 15 Purchase 280 units at $80 20 Sale 220 units 24 Sale 90 units 30 Purchase 320 units at $86

Explanation / Answer

Calculation of cost of merchandise sold and the inventory balance after each sale under LIFO method followed:

Schedule of Cost of Merchandise Sold LIFO Method Portable DVD Players 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 Jun. 1 240 $78 $18,720 Jun. 10 180 $               78.00 $        14,040.00 60 $78 $4,680.00 Jun. 15 280 $        80.00 $22,400.00 60 $78 $4,680.00 280 80 22400 Jun. 20 220 $               80.00 $        17,600.00 60 $78 $4,800.00 60 $        80 $      4,800 Jun. 24 60 $               80.00 $          4,800.00 30 $               78.00 $          2,340.00 30 $        78 $      2,340 Jun. 30 320 $        86.00 $27,520.00 30 $        78 $      2,340 320 $        86 $     27,520 Jun. 30 Balances $            38,780 $     29,860

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