CHAPTER 6: Perpetual Inventory Using FIFO

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

Inventory		Purchases		Sales
Dec. 1	320 units at $36	Dec. 10	160 units at $38	Dec. 12	224 units
		Dec. 20	144 units at $40	Dec. 14	192 units
				Dec. 31	96 units

Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. 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.

Schedule of Cost of Goods Sold FIFO Method Prepaid Cell Phones Date Purchases Quantity Purchases Unit Cost Purchases Total Cost Cost of Goods Sold Quantity Cost of Goods Sold Unit Cost Cost of Goods Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Dec. 1 Dec. 10 Dec. 12 Dec. 14 Dec. 20 Dec. 31 Dec. 31 Balances