FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question #6:
Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:
| Inventory | Purchases | Sales | |||
| May 1 | 1,550 units at $44 | May 10 | 720 units at $45 | May 12 | 1,200 units |
| 20 | 1,200 units at $48 | 14 | 830 units | ||
| 31 | 1,000 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 SoldFIFO MethodPrepaid Cell Phones
Date |
Quantity Purchased |
Purchases Unit Cost |
Purchases Total Cost |
Cost of Merchandise Sold Quantity |
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 |
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fifo is an accounting method in which inventories are valued on the first comes and first out basis. thus it is the common method used to estimate the value
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