Builder Bee Equipment sells hand-held engine analyzers to automotive service shops. Builder Bee Equipment started April with an inventory of 45 units that cost a total of $5,760. During the month, Builder Bee Equipment purchased and sold merchandise on account as follows:
Apr 6 Purchased 115 units @ $142
13 Sold 100 units @ $300
19 Purchased 80 units @ $152
25 Sold 40 units @ $300
29 Sold 75 units @ $300
Builder Bee Equipment uses the FIFO method. Cash payments on account totaled $20,000. Operating expenses for the month were $15,000, with two-thirds paid in cash and the rest accrued as Accounts Payable.
Requirements
1. Which inventory method (excluding specific-unit) most likely mimics the physical flow of Builder Bee Equipment’s inventory?
2. Prepare a perpetual inventory record using FIFO cost for this merchandise.
3. Journalize all transactions using FIFO. Record the payments on account and the operating expenses on the 30th.