FIFO perpetual inventory

Instructions

FIFO

Chart of Accounts

Journal

Final Questions

Instructions

The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30, 2016, are as follows:

Date		Transaction	Number of Units	Per Unit	Total
Apr.	3	Inventory	25	$1,200	$30,000
	8	Purchase	75	1,240	93,000
	11	Sale	40	2,000	80,000
	30	Sale	30	2,000	60,000
May	8	Purchase	60	1,260	75,600
	10	Sale	50	2,000	100,000
	19	Sale	20	2,000	40,000
	28	Purchase	80	1,260	100,800
June	5	Sale	40	2,250	90,000
	16	Sale	25	2,250	56,250
	21	Purchase	35	1,264	44,240
	28	Sale	44	2,250	99,000

	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, and date your journal entry June 30. Refer to the Chart of Accounts for exact wording of account titles.
3.	Determine the gross profit from sales for the period.
4.	Determine the ending inventory cost on June 30, 2016.
5.	Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

FIFO

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.

Date	Purchases			Cost of Merchandise Sold			Inventory
2016	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Apr. 3
8
8
11
11
30
May 8
8
10
10
19
28
28
Jun. 5
5
16
21
21
28
28
30	Balances

Chart of Accounts

CHART OF ACCOUNTS

Dunne Co.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Office Equipment
192	Accumulated Depreciation-Office Equipment
193	Store Equipment
194	Accumulated Depreciation-Store Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
222	Interest Payable
231	Salaries Payable
241	Sales Tax Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Insurance Expense
534	Office Supplies Expense
535	Rent Expense
536	Repairs Expense
537	Selling Expenses
538	Store Supplies Expense
561	Depreciation Expense-Office Equipment
562	Depreciation Expense-Store Equipment
590	Miscellaneous Expense
710	Interest Expense

Journal

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, and date your journal entry June 30. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

Final Questions

3. Determine the gross profit from sales for the period.

4. Determine the ending inventory cost on June 30, 2016.

5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

Lower

Higher