Question 3

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May 1 3,800 units at $24 May 10 1,900 units at $26 May 12 2,660 units 20 1,710 units at $28 14 2,280 units 31 1,140 units Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out 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 3. 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. Schedule of Cost of Merchandise Sold FIFO Method Prepaid Cell Phones Cost of Cost of Cost of Merchandise Merchandise Merchandise Purchases Purchases Inventory Inventory Sold Sold Sold Quantity Unit Total Unit Total Quantity Total Cost Inventory Unit Cost Date Purchased Cost Cost Quantity Cost Cost May 1 May 10 May 12 May 14 May 20 O 0 000 000 0 10 000 May 31 - May 31 Balances Previous Next >