FIFO Perpetual Inventory The beginning inventory at Dunne Co. and data on purcha
ID: 2546605 • Letter: F
Question
FIFO Perpetual Inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Date Transaction Number of Units Per Unit Total Apr. 3 Inventory 54 $225 $12,150 8 Purchase 108 270 29,160 11 Sale 72 750 54,000 30 Sale 45 750 33,750 May 8 Purchase 90 300 27,000 10 Sale 54 750 40,500 19 Sale 27 750 20,250 28 Purchase 90 330 29,700 June 5 Sale 54 790 42,660 16 Sale 72 790 56,880 21 Purchase 162 360 58,320 28 Sale 81 790 63,990 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 Goods Sold Unit Cost column and in the Inventory Unit Cost column. Dunne Co. Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30 Purchases Cost of Goods Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Apr. 3 $ $ Apr. 8 $ $ Apr. 11 $ $ Apr. 30 May 8 May 10 May 19 May 28 June 5 June 16 June 21 June 28 June 30 Balances $ $ 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. Record sale Record cost 3. Determine the gross profit from sales for the period. $ 4. Determine the ending inventory cost as of June 30. $ 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?
Explanation / Answer
Dunne Co.
Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30
Date
Purchases
Cost of Goods Sold
Inventory
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
3-Apr
54
225
12,150
54
225
12,150
8-Apr
108
270
29,160
54
225
12,150
8-Apr
108
270
29,160
8-Apr
162
41,310
11-Apr
54
225
12,150
11-Apr
18
270
4,860
90
270
24,300
30-Apr
45
270
12,150
45
270
12,150
8-May
90
300
27,000
45
270
12,150
8-May
90
300
27,000
8-May
135
39,150
10-May
45
270
12,150
10-May
9
300
2,700
81
300
24,300
19-May
27
300
8,100
54
300
16,200
28-May
90
330
29,700
54
300
2,700
28-May
90
330
29,700
28-May
144
32,400
5-Jun
54
300
16,200
90
330
29,700
16-Jun
72
330
23,760
18
330
5,940
21-Jun
162
360
58,320
18
330
5,940
162
360
58,320
180
64,260
28-Jun
18
330
5,940
28-Jun
63
360
22,680
99
360
35,640
30-Jun
99
360
35,640
504
156,330
405
120,690
99
35,640
Journal entries to record the Sales ad cost:
Total Sales during the period:
(To record cost of goods sold)
Note COGS amount is derived from the schedule above, sum of items sold and the respective cost at which they were originally purchased.
Ending Inventory from the schedule above is 99 units, valued at the last purchase rate $360 per unit = $35,640
If the company followed LIFO, since the purchase prices are in an inreasing trend, the gross profit would have been lower as well as the ending inventory since it would be valued at the earlier purchase rates of $270 and $225
Dunne Co.
Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30
Date
Purchases
Cost of Goods Sold
Inventory
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
3-Apr
54
225
12,150
54
225
12,150
8-Apr
108
270
29,160
54
225
12,150
8-Apr
108
270
29,160
8-Apr
162
41,310
11-Apr
54
225
12,150
11-Apr
18
270
4,860
90
270
24,300
30-Apr
45
270
12,150
45
270
12,150
8-May
90
300
27,000
45
270
12,150
8-May
90
300
27,000
8-May
135
39,150
10-May
45
270
12,150
10-May
9
300
2,700
81
300
24,300
19-May
27
300
8,100
54
300
16,200
28-May
90
330
29,700
54
300
2,700
28-May
90
330
29,700
28-May
144
32,400
5-Jun
54
300
16,200
90
330
29,700
16-Jun
72
330
23,760
18
330
5,940
21-Jun
162
360
58,320
18
330
5,940
162
360
58,320
180
64,260
28-Jun
18
330
5,940
28-Jun
63
360
22,680
99
360
35,640
30-Jun
99
360
35,640
504
156,330
405
120,690
99
35,640
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