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Perpetual inventory using LIFO Beginning inventory, purchases, and sales data for prepaid cell phones for December are as follows: Inventory Purchases Sales Dec. 1 310 units at $88 Dec. 10 144 units at $90 Dec. 12 240 units 20 240 units at $96 14 166 units 31 200 units A. Assuming that the perpetual inventory system is used, costing by the LIFO method, 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 4. B. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-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 6.5EX
Textbook Problem
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Perpetual inventory using LIFO

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

Inventory Purchases   Sales  
Dec. 1 310 units at $88 Dec. 10 144 units at $90 Dec. 12 240 units
    20 240 units at $96 14 166 units
        31 200 units

A. Assuming that the perpetual inventory system is used, costing by the LIFO method, 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 4.

B. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-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 by PC Phones as on December 31.

Explanation of Solution

In Last-in-First-Out method, the costs of last purchased items are considered as the 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 first-in-first out method (FIFO).

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Chapter 6 Solutions

Corporate Financial Accounting
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