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:

Instructions

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.

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?

Transcribed Image Text:

Number of Units Per Unit Total Transaction Inventory Purchase Date 40 $ 670 $ 26,800 Apr. 3 690 82,800 8 120 60 1,120 67,200 11 Sale 50 1,120 56,000 30 Sale 100 700 70,000 May 8 Purchase 80 1,120 89,600 10 Sale 19 Sale 30 1,120 33,600 28 Purchase 120 707 84,840 June 5 Sale 60 1,260 75,600 16 Sale 40 1,260 50,400 21 Purchase 180 712 128,160 28 Sale 190 1,260 239,400