FIFO Perpetual Inventory The beginning inventory of merchandise at Dunne Co. and
ID: 2562302 • 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?
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
1.
Schedule of Cost of Merchandise Sold
FIFO
2.
3.
Gross profit = $525250 - $272940 = $252310
4.
Ending inventory on June 30 = $70700
5.
Since the cost of inventory purchases has been increasing consecutively, the ending inventory under LIFO will be at lower side than FIFO. This is because under LIFO method, the sale is first recorded from latest purchased inventory.
Inventory using the last-in, first-out method will be lower.
Date Purchases Cost of Merchandise sold Inventory Qty Unit cost Total cost Qty Unit cost Total cost Qty Unit cost Total cost Apr 3 25 $1200 $30000 Apr 8 75 $1240 $93000 25 1200 30000 75 1240 93000 Apr 11 25 1200 30000 15 1240 18600 60 1240 74400 Apr 30 75 $93000 40 $48600 60 $1240 $74400 May 8 60 1260 75600 60 1240 74400 60 1260 75600 May 10 50 1240 62000 10 1240 12400 60 1260 75600 May 19 10 1240 12400 10 1260 12600 50 1260 63000 May 28 80 1260 100800 50 1260 63000 80 1260 100800 June 5 40 1260 50400 10 1260 12600 80 1260 100800 June 16 25 1260 31500 65 1260 81900 June 21 35 1264 44240 65 1260 81900 35 1264 44240 June 28 44 1260 55440 21 1260 26460 35 1264 44240 June 30 Balances $272940 $70700Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.