Perpetual Inventory Using FIFO

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

Inventory		Purchases		Sales
May 1	1,600 units at $26	May 10	800 units at $28	May 12	1,120 units
		May 20	720 units at $30	May 14	960 units
				May 31	480 units

Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out 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 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 Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Schedule of Cost of Merchandise Sold

FIFO Method

Prepaid Cell Phones