The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:

Jan.	1	Inventory	7,500	$ 75.00	$ 562,500
10	Purchase	22,500	85.00	1,912,500
28	Sale	11,250	150.00	1,687,500
30	Sale	3,750	150.00	562,500
Feb.	5	Sale	1,500	150.00	225,000
10	Purchase	54,000	87.50	4,725,000
16	Sale	27,000	160.00	4,320,000
28	Sale	25,500	160.00	4,080,000
Mar.	5	Purchase	45,000	89.50	4,027,500
14	Sale	30,000	160.00	4,800,000
25	Purchase	7,500	90.00	675,000
30	Sale	26,250	160.00	4,200,000

Instructions
1.	Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated inExhibit 3, using the first-in, first-out method.
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 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.
5.	Based upon the preceding data, would you expect the ending inventory using thelast-in, first-out methodto be higher or lower?

3/17/17, 9(37 PM FIFO perpetual inventory Instructions The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows: Date Jan. Feb. Mar. Transaction 1 Inventory Number of Units Per Unit Total 7,500 $ 75.00 $ 562,500 10 Purchase 22,500 85.00 1,912,500 28 Sale 11,250 150.00 1,687,500 30 Sale 3,750 150.00 562,500 5 Sale 1,500 150.00 225,000 10 Purchase 54,000 87.50 4,725,000 16 Sale 27,000 160.00 4,320,000 28 Sale 25,500 160.00 4,080,000 45,000 89.50 4,027,500 30,000 160.00 4,800,000 5 Purchase 14 Sale 25 Purchase 30 Sale 7,500 90.00 675,000 26,250 160.00 4,200,000 Instructions 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. 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 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. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? Chart of Accounts about:blank Page 1 of 5 3/17/17, 9(37 PM CHART OF ACCOUNTS Midnight Supplies General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 120 Accounts Receivable 131 Notes Receivable EXPENSES 132 Interest Receivable 510 Cost of Goods Sold 141 Inventory 515 Credit Card Expense 145 Office Supplies 516 Cash Short and Over 146 Store Supplies 520 Salaries Expense 151 Prepaid Insurance 531 Advertising Expense 181 Land 532 Delivery Expense 191 Office Equipment 533 Insurance Expense 192 Accumulated Depreciation-Office Equipment 534 Office Supplies Expense 193 Store Equipment 535 Rent Expense 194 Accumulated Depreciation-Store Equipment 536 Repairs Expense 537 Selling Expenses LIABILITIES 538 Store Supplies Expense 210 Accounts Payable 561 Depreciation Expense-Office Equipment 221 Notes Payable 562 Depreciation Expense-Store Equipment 222 Interest Payable 590 Miscellaneous Expense 231 Salaries Payable 710 Interest Expense 241 Sales Tax Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary FIFO Shaded cells have feedback. 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 units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column. Date Date about:blank Purchases Quantity Unit Cost Cost of goods Sold Total Cost Quantity Unit Cost Page 2 of 5 3/17/17, 9(37 PM Jan. 1 22,500 10 $85.00 $1,912,500 10 28 7,500 $75.00 28 3,750 $85.00 30 3,750 $85.00 Feb. 5 1,500 $85.00 16 13,500 $85.00 16 13,500 $85.00 28 25,500 $85.00 14 15,000 $88.00 14 15,000 $90.00 26,250 $90.00 54,000 10 $88.00 $4,725,000 10 45,000 Mar. 5 $90.00 $4,027,500 5 7,500 25 $90.00 $675,000 25 30 30 31 Balances Feedback Check My Work FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, ending inventory is made up of the most recent layer, which is beginning inventory. When deciding which layer to use for costing of the next sale ask yourself: "Is the remaining amount of t should be taken from the next purchase layer, which then contains the oldest costs. Continue this process for each transaction. If you have c costed at the March 5 and March 25 unit purchase prices. Journal Shaded cells have feedback. 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. Ass all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. How does grading work? JOURNAL about:blank Score: 47/51 ACCOUNTING EQUAT Page 3 of 5 3/17/17, 9(37 PM DATE Mar. 31 1 DESCRIPTION Accounts Receivable Sales 2 Mar. 31 3 Cost of Goods Sold Inventory 4 POST. REF. DEBIT 19,875,000.00 CREDIT ASSETS LIABILITIES 19,875,000.00 10,918,875.00 10,918,875.00 Points: Feedback Check My Work 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 goods sold can be obtained by adding the FIFO costs in the perpetual inventory record. When the perpetual inventory system is used, revenu recorded each time a sale is made along with an entry to record the cost of the merchandise sold. For this problem, however, prepare one jo entry for the sale on account and one for the cost of goods sold. Final Questions Shaded cells have feedback. 3. Determine the gross profit from sales for the period. $19,875,000.00 Points: 0/1 Points: 0/1 Feedback Check My Work Sales minus cost of goods sold equals gross profit. 4. Determine the ending inventory cost as of March 31. $10,918,875.00 Feedback Check My Work 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 most recent layer cost to determine the FIFO cost of the ending inventory. about:blank Page 4 of 5 3/17/17, 9(37 PM 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? Lower Higher Points: 1/1 Feedback Check My Work Consider how prices were moving. Remember FIFO reports higher gross profit, net income, and ending inventory than the LIFO method when costs (prices) are increasing. about:blank Page 5 of 5