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

Date		Transaction	Number of Units	Per Unit	Total
Jan.	1	Inventory	2,600	$54.00	$140,400
	10	Purchase	7,000	62.00	434,000
	28	Sale	3,850	108.00	415,800
	30	Sale	1,300	108.00	140,400
Feb.	5	Sale	500	108.00	54,000
	10	Purchase	17,500	64.00	1,120,000
	16	Sale	8,700	113.00	983,100
	28	Sale	8,600	113.00	971,800
Mar.	5	Purchase	14,000	65.60	918,400
	14	Sale	10,100	113.00	1,141,300
	25	Purchase	3,300	66.00	217,800
	30	Sale	7,750	113.00	875,750

	Instructions
1.	Record the inventory, purchases, and cost of merchandise 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 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.
5.	Based upon the preceding data, would you expect the inventory using the last-in, first-out method The method of inventory costing based on the assumption that the cost of merchandise sold is the cost of the most recent purchases. to be higher or lower?

FIFO

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in

Exhibit 3

, using the first-in, first-out method.

Date	Purchases			Cost of Merchandise Sold			Inventory
	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

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

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

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5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method

The method of inventory costing based on the assumption that the cost of merchandise sold is the cost of the most recent purchases.

to be higher or lower?

Higher

Lower

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