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FIFO perpetual inventory The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31 are as follows: Instructions 1. Record the inventory, purchases, and cost of goods 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 goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account. 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 ending inventory using the last-in, first-out method to be higher or lower?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 6, Problem 1PA
Textbook Problem
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FIFO perpetual inventory

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

Chapter 6, Problem 1PA, FIFO perpetual inventory The beginning inventory at Midnight Supplies and data on purchases and

Instructions

  1. 1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method.
  2. 2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account.
  3. 3. Determine the gross profit from sales for the period.
  4. 4. Determine the ending inventory cost as of March 31.
  5. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?

(1)

To determine

Record the inventory, purchases and cost of merchandise sold in perpetual inventory system.

Explanation of Solution

Perpetual Inventory System:

Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases, and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first...

(2)

To determine

Record the journal entries for sales and cost of merchandise sold accounts.

(3)

To determine

Compute gross profit from sales for the period.

(4)

To determine

Compute ending inventory cost for the period.

(5)

To determine

State the inventory value to be higher or lower using LIFO method for the given above data.

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Chapter 6 Solutions

Financial And Managerial Accounting
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