Beginning inventory, purchases, and sales data for portable game players are as follows:
Apr. 1 ............. Inventory ............. 120 units at $26
..... 10 ............. Sale ............................. 90 units
..... 15 ............. Purchase .............. 140 units at $28
..... 20 ............. Sale ............................ 110 units
..... 24 ............. Sale .............................. 40 units
..... 30 ......... Purchase ................... 160 units at $30
The business maintains a perpetual inventory system, costing by the first-in, first-out method.
a. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3.
b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?
Exhibit 3: Entries and Perpetual Inventory Account (FIFO)

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Item 127B Jan. 4 Accounts Recervable Sales 21,000 21,000 Cost of Merchandise Sold 4 Cost of Merchandise Sold 14,000 Purchases Inventory 14,000 Unit Total e Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost 1,00020.0020,000 700 20.00 14,000300 20.00 6,000 300 20.00 6,000 500 2240 11,200 Unit Total Unit Total 10 Merchandise Inventory 11,200 Accounts Payable 11,200 4 10 22 Accounts Receivable 10,800 500 2240 11,200 Sales 10,800 22 Cost of Merchanise Sold 7,344 Merchandise Inventory 300 60 20.00 6,000 7,344 2240 1,344440 22.40 9,856 240 2240 5,376 200 22.40 4,480 200 22.40 4,480 23.30 13,980 18,460 28 30 28 Accounts Receivable 7,200 600 23.30 13,980 Sales 7,200 600 28 Cost of Merchanise Sold 5,376 Merchandise Inventory 31 Balances 26,720 5,376 30 Merchandise Inventory 13,980 Cost of merchandise sold January 31 inventory Accounts Payable 13,980