LIFO Perpetual Inventory The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Required: 1. Record the inventory, purchases, and cost of goods 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 Goods Sold Unit Cost column and in the Inventory Unit Cost column. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. If an amount box does not require an entry, leave it blank. 3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost on June 30. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? 6. Repeat the requirments from 1~5 using LIFO inventory system. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

LIFO

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EXPLAIN IN A CHART

Per Unit Total Date Transactio Number of Units Apr. 3 Inventory 25 8 Purchase 75 11 Sale 40 30 Sale 30 8-May Purchase 60 10 Sale 50 19 Sale 20 28 Purchase 80 5-Jun Sale 40 16 Sale 25 21 Purchase 35 28 Sale 44 $1,200 1,240 2,000 2,000 1,260 2,000 2,000 1,260 2,250 2,250 1,264 2,250 $30,000 93,000 80,000 60,000 75,600 100,000 40,000 100,800 90,000 56,250 44,240 99,000 1. Purchases Cost of Goods Sold Inventory Unit Unit Total Cost Unit Cost Total Cost Date Total Cost Quantity Quantity Cost Cost Quantity 25 Apr. 3 $1,200 $ 30,000 8 11 30 May B 10 19 28 June 5 16 21 28 30 2 2. JOURNAL Description Debit Credit Accounts Receivable Sales Cost of Goods Sold Inventory LOIDID 3. Gross profit for the sales period 4. Ending inventory cost 5. Inventory under LIFO would be