1. Perpetual Inventory Using LIFO

   Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

   Inventory		Purchases		Sales
   May 1	4,000 units at $21	May 10	2,000 units at $23	May 12	2,800 units
   		May 20	1,800 units at $25	May 14	2,400 units
   				May 31	1,200 units

   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. 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.

   Schedule of Cost of Merchandise Sold
   LIFO Method
   Prepaid Cell Phones
   Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
   May 1								$	$
   May 10		$	$
   May 12					$	$
   May 14
   May 20
   May 31
   May 31	Balances					$			$

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

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