LIFO Perpetual Inventory The beginning inventory at Funky Party Supplies and dat
ID: 2542997 • Letter: L
Question
LIFO Perpetual Inventory
The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period 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 5, using the last-in, first-out method. 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. Round unit cost to two decimal places, if necessary.
2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.
3. Determine the ending inventory cost as of March 31, 2016.
$
of Units Per Unit Total Jan. 1 Inventory 2,500 $60.00 $150,000 10 Purchase 7,500 68.00 510,000 28 Sale 3,750 120.00 450,000 30 Sale 1,250 120.00 150,000 Feb. 5 Sale 500 $120.00 $60,000 10 Purchase 18,000 70.00 1,260,000 16 Sale 9,000 125.00 1,125,000 28 Sale 8,500 125.00 1,062,500 Mar. 5 Purchase 15,000 71.60 1,074,000 14 Sale 10,000 125.00 1,250,000 25 Purchase 2,500 72.00 180,000 30 Sale 8,750 125.00 1,093,750
Explanation / Answer
As per given data, question is to be answered as per LIFO (LAST IN FIRST OUT) Method.
The LIFO method operates under the assumption that the last item of inventory purchased is the first one sold. Based on this assumption answer to the first question is as follows ;
Funky Party Supplies
Schedule of Cost of Merchandise Sold
LIFO Method
For the three months ended March 31, 2016
Date
Purchases
Cost of Merchandise Sold
Inventory
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan-01
2500
$ 60.00
$ 150,000.00
Jan-10
7500
$ 68.00
$ 510,000.00
2500
$ 60.00
$ 150,000.00
7500
$ 68.00
$ 510,000.00
Jan-28
3750
$ 120.00
$ 450,000.00
2500
$ 60.00
$ 150,000.00
3750
$ 68.00
$ 255,000.00
Jan-30
1250
$ 120.00
$ 150,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
Feb-05
500
$ 120.00
$ 60,000.00
2500
$ 60.00
$ 150,000.00
2000
$ 68.00
$ 136,000.00
Feb-10
18000
$ 70.00
$ 1,260,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
18000
$ 70.00
$ 1,260,000.00
Feb-16
9000
$ 125.00
$ 1,125,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
9000
$ 70.00
$ 630,000.00
Feb-28
8500
$ 125.00
$ 1,062,500.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
Mar-05
15000
$ 71.60
$ 1,074,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
15000
$ 71.60
$ 1,074,000.00
Mar-10
10000
125
$ 1,250,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
5000
$ 71.60
$ 358,000.00
Mar-25
2500
72
$ 180,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
5000
$ 71.60
$ 358,000.00
2500
$ 72.00
$ 180,000.00
Mar-30
8750
125
$ 1,093,750.00
2500
$ 60.00
$ 150,000.00
1750
$ 68.00
$ 119,000.00
Mar-31
Balances
$ 5,191,250.00
$ 269,000.00
2. Answer to the second question is as follows;
Total Sales $ 5,191,250
Total Cost of Merchandise Sold $ 2,939,000
Gross Profit from Sales $ 2,252,250
3. Answer to the third question is as follows ;
Ending Inventory as on March 31, 2016 is $ 269,000
Funky Party Supplies
Schedule of Cost of Merchandise Sold
LIFO Method
For the three months ended March 31, 2016
Date
Purchases
Cost of Merchandise Sold
Inventory
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Jan-01
2500
$ 60.00
$ 150,000.00
Jan-10
7500
$ 68.00
$ 510,000.00
2500
$ 60.00
$ 150,000.00
7500
$ 68.00
$ 510,000.00
Jan-28
3750
$ 120.00
$ 450,000.00
2500
$ 60.00
$ 150,000.00
3750
$ 68.00
$ 255,000.00
Jan-30
1250
$ 120.00
$ 150,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
Feb-05
500
$ 120.00
$ 60,000.00
2500
$ 60.00
$ 150,000.00
2000
$ 68.00
$ 136,000.00
Feb-10
18000
$ 70.00
$ 1,260,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
18000
$ 70.00
$ 1,260,000.00
Feb-16
9000
$ 125.00
$ 1,125,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
9000
$ 70.00
$ 630,000.00
Feb-28
8500
$ 125.00
$ 1,062,500.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
Mar-05
15000
$ 71.60
$ 1,074,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
15000
$ 71.60
$ 1,074,000.00
Mar-10
10000
125
$ 1,250,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
5000
$ 71.60
$ 358,000.00
Mar-25
2500
72
$ 180,000.00
2500
$ 60.00
$ 150,000.00
2500
$ 68.00
$ 170,000.00
500
$ 70.00
$ 35,000.00
5000
$ 71.60
$ 358,000.00
2500
$ 72.00
$ 180,000.00
Mar-30
8750
125
$ 1,093,750.00
2500
$ 60.00
$ 150,000.00
1750
$ 68.00
$ 119,000.00
Mar-31
Balances
$ 5,191,250.00
$ 269,000.00
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