The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, 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 4, 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 as of March 31, 2016.
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:

Date Transaction Jan. Inventory 10 Purchase Feb. 5 Sale 500 $120.00 60,000 125.00 1,125,000 125.00 1,062,500 71.60 1,074,000 125.00 1,250,000 Mar. 5 Purchase 125.00 1,093,750