LIFO Perpetual Inventory The beginning inventory of merchandise at Rhodes Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Number Date Transaction Per Unit Total of Units Apr. 3 Inventory 8 Purchase 132 11 Sale 30 Sale May 8 Purchase! 66 5600 $39,600 720 95,040 88 2,000 176,000 55 2,000 110,000 110 800 88,000 10 Sale 66 2,000 132,000 19 Sale 33 2,000 66,000 28 Purchase 110 880 96,800 June 5 Sale 66 2,100 138,600 16 Sale 88 2,100 184,800 21 Purchase 198 960 190,080 28 Sale 99 2,100 207,900 Required: 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 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 Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Rhodes Co. Perpetual Inventory Account LIFO Method For the three-months ended June 30 Purchases Cost of Merchandise Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total CostQuantity Unit CostTotal Cost Apr. 3 Apr. 8 132 720 $ 95,040 $ 66 600 39,600 > 66 600 39,600 132 720 95,040 Apr. 11 Apr. 30 May 8 110 800 88,000 May 10 May 19 May 28 June 5 June 16 110 880 96,800 June 21 198 960 190,080 June 28 $ $ June 30 Balances $ 2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period. Total sales Total cost of merchandise sold S Gross profit 3. Determine the ending inventory cost on June 30. $ Feedback Check My Work 1. When the perpetual inventory system is used, revenue is recorded each time a sale is made along with an entry to record the cost of the merchandise sold. LIFO means the last units purchased are assumed to be the first to be sold. Therefore after each sale, the remaining or ending inventory is made up of the first or earliest purchases. Think of your inventory in terms of "layers." The first sale comes from the most recent purchase layer. When deciding which layer to use for costing of each sale ask yourself: "Is there enough inventory left in the most recent purchase to cover the sale?" If not, the other units sold should be taken from the second most recent purchase layer, which then contains the most recent costs. Continue this process for each transaction. If you have done this problem correctly, the remaining units making up ending inventory will be costed at the April 3 beginning inventory and the May 28 unit purchase price. 2. Total sales are obtained by taking the number of units sold times their sale prices for all sales and adding these amounts together. The total cost of merchandise sold can be obtained by adding the LIFO costs in the perpetual inventory record. Sales minus cost of merchandise sold equals gross profit. 3. The ending inventory is what is left after subtracting the cost of goods sold from the goods available for sale. Multiply the units remaining after the last sale by their corresponding earliest layer cost to determine the LIFO cost of the ending inventory.