FIFO perpetual inventory The beginning inventory of merchandise at Dunne Co. and
ID: 2520482 • Letter: F
Question
FIFO perpetual inventory
The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30, 2016, are as follows:
Date
Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method.
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, and date your journal entry June 30. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
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3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost on June 30, 2016.
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Date
Transaction Number of Units Per Unit Total Apr. 3 Inventory 25 $1,200 $30,000 8 Purchase 75 1,240 93,000 11 Sale 40 2,000 80,000 30 Sale 30 2,000 60,000 May 8 Purchase 60 1,260 75,600 10 Sale 50 2,000 100,000 19 Sale 20 2,000 40,000 28 Purchase 80 1,260 100,800 June 5 Sale 40 2,250 90,000 16 Sale 25 2,250 56,250 21 Purchase 35 1,264 44,240 28 Sale 44 2,250 99,000Explanation / Answer
Ending inventory of 26 units: $ 32864
Req 5: Inventory as per LIFO would have been lower due to rising prices
STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 3-Apr 25 1200 30000 8-Apr 75 1240 93000 25 1200 30000 75 1240 93000 11-Apr 25 1200 30000 15 1240 18600 60 1240 74400 30-Apr 30 1240 37200 30 1240 37200 8-May 60 1260 75600 30 1240 37200 60 1260 75600 10-May 30 1240 37200 20 1260 25200 40 1260 50400 19-May 20 1260 25200 20 1260 25200 28-May 80 1260 100800 100 1260 126000 5-Jun 40 1260 50400 60 1260 75600 16-Jun 25 1260 31500 35 1260 44100 21-Jun 35 1264 44240 35 1260 44100 35 1264 44240 28-Jun 35 1260 44100 9 1264 11376 26 1264 32864 TOTAL 250 313640 249 310776 26 32864 Journal entries: Accounts receivable Dr. 525250 Sales revenue 525250 Cost of Goods sold Dr. 310776 Inventory 310776 Gross profit: Sales revenue 525250 Less: COGS 310776 Gross profit: 214474Ending inventory of 26 units: $ 32864
Req 5: Inventory as per LIFO would have been lower due to rising prices
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