Textbook Problem

Perpetual inventory using FIFO

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

November	1	Inventory	120 units at $39
	10	Sale	90 units
	15	Purchase	140 units at $40
	20	Sale	110 units
	24	Sale	45 units
	30	Purchase	160 units at $43

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.

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