Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable DVD players are as follows:

June 1		Inventory	50 units @ $45
6		Sale	36 units
14		Purchase	27 units @ $47
19		Sale	21 units
25		Sale	11 units
30		Purchase	37 units @ $50

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

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 4.

a. 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.

Cost of the Merchandise Sold Schedule
First-in, First-out Method
Portable DVD Players
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
June 1							50	$45	$2250
June 6					$	$
June 14		$	$
June 19
June 25
June 30
June 30	Balances					$			$

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

16. MC.06-98

Damaged merchandise that can be sold only at prices below cost should be valued at

LIFO

FIFO

average cost

net realizable value

17. MC.05-76

The inventory system employing accounting records that continuously disclose the amount of inventory is called

retail

periodic

physical

perpetual

18. MC.05-154

Inventory shrinkage is recorded when

merchandise is returned by a buyer

merchandise is returned to a seller

there is a difference between a physical count of inventory and inventory records

merchandise purchased from a seller is incomplete or short

19. MC.05-130

Under a perpetual inventory system

increases in inventory resulting from purchases are debited to Purchases

the purchase returns and allowances account is credited when goods are returned to vendors

accounting records continuously disclose the amount of inventory

there is no need for a year-end physical count

20. EX.6-12.ALGO

Periodic Inventory by Three Methods

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	17 units @ $24
Feb. 17	Purchase	16 units @ $25
Jul. 21	Purchase	11 units @ $27
Nov. 23	Purchase	19 units @ $28

There are 25 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to one decimal and final answers to the nearest whole dollar, if required.

a. Determine the inventory cost by the first-in, first-out method. $

b. Determine the inventory cost by the last-in, first-out method. $

c. Determine the inventory cost by the weighted average cost method. $