Perpetual Inventory Using FIFOBeginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:Inventory Purchases Sales May 14,200 units at $40May 102,100 units at $42May 122,940 units  May 201,890 units at $44May 142,520 units    May 311,260 unitsAssume 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 PhonesDatePurchases QuantityPurchases Unit CostPurchases Total CostCost of Merchandise Sold QuantityCost of Merchandise Sold Unit CostCost of Merchandise Sold Total CostInventory QuantityInventory Unit CostInventory Total CostMay 1       $$May 10 $$                May 12    $$             May 14                   May 20                   May 31                   May 31Balances    $  $

Question
Asked Nov 6, 2019

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

Inventory   Purchases   Sales  
May 1 4,200 units at $40 May 10 2,100 units at $42 May 12 2,940 units
    May 20 1,890 units at $44 May 14 2,520 units
        May 31 1,260 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 Sold
FIFO Method
Prepaid Cell Phones
Date Purchases Quantity 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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Expert Answer

Step 1

FIFO Method:

FIFO is stands for First-in, first-out. Under this method, the oldest costs will be the first costs to be removed from the balance sheet account inventory and will be the first costs to be included in the Cost of goods sold in income statement.

Step 2

Following is the Schedule of Merchan...

Schedule of Cost of Merchandise Sold
FIFO Method
Prepaid Cell Phones
Date Purchases Purchases PurchasesCost of
Quantity Unit Cost Total
Inventory Inventory Inventory
Cost of
Cost of
merchandise merchandise merchandise Quantityunit cost Total
sold
sold unit
Cost
sold total
cost
quantity
cost
cost
May
$40
$168,000
4,200
May
10
$42
$88,200
$40
$168,000
2,100
4,200
$42
$88,200
$50,400
2,100
1,260
$40
May
12
2,940
$117,600
$40
$42
$88,200
2,100
$40
$50,400
May
14
1,260
$42
$52,920
$42
S35,280
$35,280
1,260
840
$83,160
May
1,890
$44
840
$42
20
$44
$83,160
1,890
May
840
$42
$35,280
31
1,470
1,470
$44
$18,480
$274,680
$44
$64,680
$64,680
420
Мay
Balance
$171,360
6,720
31
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Schedule of Cost of Merchandise Sold FIFO Method Prepaid Cell Phones Date Purchases Purchases PurchasesCost of Quantity Unit Cost Total Inventory Inventory Inventory Cost of Cost of merchandise merchandise merchandise Quantityunit cost Total sold sold unit Cost sold total cost quantity cost cost May $40 $168,000 4,200 May 10 $42 $88,200 $40 $168,000 2,100 4,200 $42 $88,200 $50,400 2,100 1,260 $40 May 12 2,940 $117,600 $40 $42 $88,200 2,100 $40 $50,400 May 14 1,260 $42 $52,920 $42 S35,280 $35,280 1,260 840 $83,160 May 1,890 $44 840 $42 20 $44 $83,160 1,890 May 840 $42 $35,280 31 1,470 1,470 $44 $18,480 $274,680 $44 $64,680 $64,680 420 Мay Balance $171,360 6,720 31

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