Dec. 1

Beginning merchandise inventory

13

units @

$11

each

8

Sale

9

units @

$24

each

14

Purchase

17

units @

$15

each

21

Sale

14

units @

$24

each

Assume that

Upper J Upper L ToysJ L Toys

store bought and sold a line of dolls during

DecemberDecember

as follows:

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(Click the icon to view the transactions.)

Upper J Upper L ToysJ L Toys

uses the perpetual inventory system.Read the requirements.

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Requirement 1. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the FIFO inventory costing method.

Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)

	Purchases			Cost of Goods Sold			Inventory on Hand
		Unit	Total		Unit	Total		Unit	Total
Date	Quantity	Cost	Cost	Quantity	Cost	Cost	Quantity	Cost	Cost
Dec. 1
Dec. 8
Dec. 14
Dec. 21
Totals

Compute the gross profit using the using the FIFO inventory costing method.

Gross profit is $

using the FIFO inventory costing method.

Requirement 2. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the LIFO inventory costing method.

Begin by computing the cost of goods sold and cost of ending merchandise inventory using the LIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)

	Purchases			Cost of Goods Sold			Inventory on Hand
		Unit	Total		Unit	Total		Unit	Total
Date	Quantity	Cost	Cost	Quantity	Cost	Cost	Quantity	Cost	Cost
Dec. 1
Dec. 8
Dec. 14
Dec. 21
Totals

Compute the gross profit using the using the LIFO inventory costing method.

Gross profit is $

using the LIFO inventory costing method.

Requirement 3. Which method results in a higher cost of goods sold?

The method with the higher cost of goods sold is

FIFO.

LIFO.

neither, they are equal.

Requirement 4. Which method results in a higher cost of ending merchandise inventory?

The method with the higher cost of ending merchandise inventory is

FIFO.

LIFO.

neither, they are equal.

Requirement 5. Which method results in a higher gross profit?

The method with the higher gross profit is

FIFO.

LIFO.

neither, they are equal.

Enter any number in the edit fields and then continue to the next question.