Question 4

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Purchases Sales Inventory May 1 2 ,800 units at $40 May 10 May 20 1,400 units at $42 ,260 units at $44 1 May 121,960 units May 14 1,680 units May 31 840 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 Cost of Cost of Cost of Purchases Purchases Merchandise Merchandise Sold Merchandise Sold Unit Cost Total Cost Sold Quantity Unit Cost Total Cost Date Purchase Inventory Inventory Inventory Quantity Unit Cost Total Cost May 1 May 14 May May 31 May Balances 31