FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Topic Video
Question
Date
May 1
May 10
May 12
May 14
May 20
May 31
Quantity
Purchased
May 31 Balances
Schedule of Cost of Merchandise Sold
LIFO Method
Prepaid Cell Phones
Purchases Purchases Quantity
Unit Cost Total Cost Sold
Cost of
Cost of
Merchandise Merchandise
Sold
Sold
Unit Cost
Total Cost
88 8
0
Inventory Inventory Inventory
Quantity Unit Cost Total Cost
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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Transcribed Image Text:Date May 1 May 10 May 12 May 14 May 20 May 31 Quantity Purchased May 31 Balances Schedule of Cost of Merchandise Sold LIFO Method Prepaid Cell Phones Purchases Purchases Quantity Unit Cost Total Cost Sold Cost of Cost of Merchandise Merchandise Sold Sold Unit Cost Total Cost 88 8 0 Inventory Inventory Inventory Quantity Unit Cost Total Cost b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?
Perpetual Inventory Using LIFO
Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:
Inventory
Purchases
Sales
May 12
May 1
May 10
20
14
31
2,000 units at $27
1,000 units at $29
900 units at $31
1,400 units
1,200 units.
600 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.
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Transcribed Image Text:Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May 12 May 1 May 10 20 14 31 2,000 units at $27 1,000 units at $29 900 units at $31 1,400 units 1,200 units. 600 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.
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