FIFO Perpetual Inventory The beginning inventory of merchandise at Dunne Co. and
ID: 2525728 • 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 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. 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.
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 on June 30.
$
5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
Lower
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 99,000
Explanation / Answer
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 Aril 30 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 1264 32864 Req 2: Journal entries: Accounts receivable Dr. 525250 Sales revenue 525250 Cost of goods sold Dr. 310776 Merchandise inventory 310776 Req 3: Gross Profit: Ssales 525250 Less: Cost of g oods sold 310776 Gross Profit: 214474 Req 4: Cost of Ending Inventory: $ 32864 Req 5: LOWER, the cost of ending inventory will be lower in LIFO as the ccost of inventory is rising.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.