Beginning inventory, purchases, and sales data for prepaid cell phones for August are

as follows:

Inventory Purchases Sales

Aug. 1 775 units at $44 Aug. 10 360 units at $45 Aug. 12 600 units

20 600 units at $48 14 415 units

31 500 units

a. Assuming that the perpetual inventory system is used, costing by the LIFO 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 4.

b. Based upon the preceding data, would you expect the inventory to be higher or lower

using the first-in, first-out method?