The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows:

Date			Transaction	Number of Units	Per Unit	Total
Jan.		1	Inventory	2,600	$58.00	$150,800
		10	Purchase	7,200	66.00	475,200
		28	Sale	3,950	116.00	458,200
		30	Sale	1,300	116.00	150,800
Feb.		5	Sale	500	116.00	58,000
		10	Purchase	17,500	68.00	1,190,000
		16	Sale	9,200	121.00	1,113,200
		28	Sale	8,000	121.00	968,000
Mar.		5	Purchase	14,400	69.60	1,002,240
		14	Sale	10,100	121.00	1,222,100
		25	Purchase	3,300	70.00	231,000
		30	Sale	7,900	121.00	955,900
	Instructions
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 first-in, first-out method.
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 and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
3.	Determine the gross profit from sales for the period.
4.	Determine the ending inventory cost as of March 31, 2016.
5.	Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

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 first-in, first-out method.

Date	Purchases			Cost of Merchandise Sold			Inventory
2016	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1
10
10
28
28
30
Feb. 5
10
10
16
16
28
Mar. 5
5
14
14
25
25
30
30
31	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 and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

3. Determine the gross profit from sales for the period.

4. Determine the ending inventory cost as of March 31, 2016.

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

Higher

Lower