Question
FIFO Perpetual Inventory The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are
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FIFO Perpetual Inventory
The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:
Date Transaction Number of Units Per Unit Total Apr. 3 Inventory 36 $150 $5,400 8 Purchase 72 180 12,960 11 Sale 48 500 24,000 30 Sale 30 500 15,000 May 8 Purchase 60 200 12,000 10 Sale 36 500 18,000 19 Sale 18 500 9,000 28 Purchase 60 220 13,200 June 5 Sale 36 525 18,900 16 Sale 48 525 25,200 21 Purchase 108 240 25,920 28 Sale 54 525 28,350
Required:
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.
Dunne Co. Schedule of Cost of Merchandise Sold FIFO Method For the three-months ended June 30 Purchases Cost of Merchandise Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Apr. 3 $ $ Apr. 8 $ $ Apr. 11 $ $ Apr. 30 May 8 May 10 May 19 May 28 June 5 June 16 June 21 June 28 June 30 Balances $ $
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.
Record sale - Accounts Receivable
- Cash
- Fees Earned
- Merchandise Inventory
- Sales
- Accounts Receivable
- Cash
- Fees Earned
- Merchandise Inventory
- Sales
Record cost - Accounts Receivable
- Cash
- Cost of Merchandise Sold
- Sales
- Merchandise Inventory
- Accounts Payable
- Accounts Receivable
- Cash
- Cost of Merchandise Sold
- Merchandise Inventory
3. Determine the gross profit from sales for the period. $
4. Determine the ending inventory cost as of June 30. $
5. Based upon the preceding data, would you expect the inventory using the A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.last-in, first-out method to be higher or lower?
- Higher
- Lower
FIFO Perpetual Inventory
The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:
Date | Transaction | Number of Units | Per Unit | Total | ||||
Apr. 3 | Inventory | 36 | $150 | $5,400 | ||||
8 | Purchase | 72 | 180 | 12,960 | ||||
11 | Sale | 48 | 500 | 24,000 | ||||
30 | Sale | 30 | 500 | 15,000 | ||||
May 8 | Purchase | 60 | 200 | 12,000 | ||||
10 | Sale | 36 | 500 | 18,000 | ||||
19 | Sale | 18 | 500 | 9,000 | ||||
28 | Purchase | 60 | 220 | 13,200 | ||||
June 5 | Sale | 36 | 525 | 18,900 | ||||
16 | Sale | 48 | 525 | 25,200 | ||||
21 | Purchase | 108 | 240 | 25,920 | ||||
28 | Sale | 54 | 525 | 28,350 |
Required:
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.
Dunne Co. Schedule of Cost of Merchandise Sold FIFO Method For the three-months ended June 30 | |||||||||
Purchases | Cost of Merchandise Sold | Inventory | |||||||
Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
Apr. 3 | $ | $ | |||||||
Apr. 8 | $ | $ | |||||||
Apr. 11 | $ | $ | |||||||
Apr. 30 | |||||||||
May 8 | |||||||||
May 10 | |||||||||
May 19 | |||||||||
May 28 | |||||||||
June 5 | |||||||||
June 16 | |||||||||
June 21 | |||||||||
June 28 | |||||||||
June 30 | Balances | $ | $ |
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.
Record sale |
| ||
| |||
Record cost |
| ||
|
3. Determine the gross profit from sales for the period. $
4. Determine the ending inventory cost as of June 30. $
5. Based upon the preceding data, would you expect the inventory using the A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.last-in, first-out method to be higher or lower?
- Higher
- Lower
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