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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?

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Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

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Chapter
Section
BuyFindarrow_forward

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
Chapter 6, Problem 6.3EX
Textbook Problem
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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?

(a)

To determine

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.

To determine: cost of merchandise sold for each sale and inventory balance after each sale of DVD as on November 30.

Explanation of Solution

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...

(b)

To determine

To state: if inventory for the preceding data is expected to be higher or lower using last-in-first out method.

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Chapter 6 Solutions

Corporate Financial Accounting
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