EX 7-5. Perpetual Inventory Using LIFO OBJ. 2,3 Beginning inventory. purchases, and sales data for prepaid cell phones for May are as follows: May 1 1.550 May 10 720 units at $45 May 12 14 33 1.200 30 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 ANSWER Inventory balance. May 31, 520,160 b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first in first out method? EX 7-18. Effect of Errors in Physical Inventory OBJ. 6 Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2018, Fonda Motorcycle Shop incorrectly counted its inventory as 5337,500 instead of the correct amount of $328 850. a State the effect of the error on the December 31, 2018, balance sheet of Fonda Motorcycle Shop, State the effect of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 2048 c. If uncorrected, what would be the effect of the error on the 2019 income statement? d. If uncorrected, what would be the effect of the error on the December 31, 20Y9, balance sheet