Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 5.
b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?
Exhibit 5: Direct Write-Off and Allowance Methods

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Inventory Purchases Sales 1,550 units at $44 May 10 720 units at $45 1,200 units at $48 May 12 1,200 units 4 830 units 1,000 units 20 Direct Write-Off Method Allowance Method Bad debt expense When the specific customer Using estimate based on is recorded accounts are determined to be uncollectible. (1) a percent of sales or (2) an analysis of receivables. Allowance account Primary users No allowance account is used. Small companies and companies The allowance account is used. Large companies and those with a with few receivables. large amount of receivables.