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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Perpetual inventory using FIFO

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

Apr. 1 Inventory 120 units at $26
  10 Sale 90 units
  15 Purchase 140 units at $28
  20 Sale 110 units
  24 Sale 40 units
  30 Purchase 160 units at $30

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

  1. a. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3.
  2. 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 PG as on April 30.

Explanation

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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