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Perpetual inventory using FIFO

Beginning inventory, purchases, and sales data for DVD players are as follows:

Nov. $1$ Inventory $,140$ units at $$29$

$10$ Sale $110$ units

$15$ Purchase $,150$ units at $$30$

$20$ Sale $120$ units

$24$ Sale $,35$ units

$30$ Purchase $,140$ units at $$34$

The business maintains a perpetual inventory system, costing by the first$-$in$,$ first$-$out method.

a$.$ Determine the cost of goods 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 Goods Sold Unit Cost column and in the Inventory Unit Cost column.

First$-$in$,$ First$-$out Method

DVD Players

Cost of Cost of

Quantity Purchases Purchases Quantity Goods Sold Goods Sold Inventory Inventory Inventory

Date

Purchased Unit Cost Total Cost Sold Unit Cost Total Cost

Quantity

Unit Cost

Total Cost

Nov. $1$

Nov. $10$

Nov. $15$

Cost of

Cost of

Quantity Purchases Purchases Quantity Goods Sold Goods Sold Inventory Inventory Inventory

Date Purchased Unit Cost Total Cost Sold Unit Cost Total Cost Quantity Unit Cost Total Cost

Nov, $1$

Nov. $10$

Nov. $15$

Nov. $20$

Nov. $24$

Nov. $30$

Nov. $30$ Balances

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Note that this exercise uses the perpetual inventory system. 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 purchases.

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

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