PR 7-1B FIFO perpetual inventory
The beginning inventory of merchandise at Francesca Co. and data on purchases and
sales for a three-month period are as follows:
Answer:
1.
Purchases Cost of Merchandise Sold Inventory
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost July 3 75 1,500 112,500 8 150 1,800 270,000 75 150 1,500 1,800 112,500 270,000 11 75 15 1,500 1,800 112,500 27,000 135 1,800 243,000 30 45 1,800 81,000 90 1,800 162,000 Aug. 8 125 2,000 250,000 90 125 1,800 2,000 162,000 250,000 10 90 20 1,800 2,000 162,000 40,000 105 2,000 210,000 19 80 2,000 160,000 25 2,000 50,000 28 100 2,200 220,000 25 100 2,000 2,200 50,000 220,000 Sept. 5 25 35 2,000 2,200 50,000 77,000 65 2,200 143,000 16 50 2,200 110,000 15 2,200 33,000 21 180 2,400 432,000 15 180 2,200 2,400 33,000 432,000 28 15 75 2,200 2,400 33,000 180,000 105 2,400 252,000 30 Balances 1,032,500 252,000
2. Accounts Receivable...................................................... 1,675,000 Sales........................................................................... 1,675,000
Cost of Merchandise Sold.............................................. 1,032,500
Merchandise Inventory.............................................. 1,032,500
3. $642,500 ($1,675,000 – $1,032,500)
4. $252,000 (105 units × $2,400)
5. Since the prices rose from $1,500 for the July 3 inventory to $2,400 for the purchase on September 21, we would expect that under last-in, first-out the inventory would be lower.
sales for a three-month period are as follows:
Date Transaction
Number
of Units
Per
Unit Total
July 3 Inventory 75 $1,500 $112,500
8 Purchase 150 1,800 270,000
11 Sale 90 3,000 270,000
30 Sale 45 3,000 135,000
Aug. 8 Purchase 125 2,000 250,000
10 Sale 110 3,000 330,000
19 Sale 80 3,000 240,000
28 Purchase 100 2,200 220,000
Sept. 5 Sale 60 3,500 210,000
16 Sale 50 3,500 175,000
21 Purchase 180 2,400 432,000
28 Sale 90 3,500 315,000
Instructions
1. Record the inventory, purchases, and cost of merchandise 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 merchandise sold for the period. Journalize
the entries in the sales and cost of merchandise 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.
5. Based upon the preceding data, would you expect the inventory using the last-in,
first-out method to be higher or lower?
Answer:
1.
Date
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost
Quantity
Unit Cost
Total Cost July 3 75 1,500 112,500 8 150 1,800 270,000 75 150 1,500 1,800 112,500 270,000 11 75 15 1,500 1,800 112,500 27,000 135 1,800 243,000 30 45 1,800 81,000 90 1,800 162,000 Aug. 8 125 2,000 250,000 90 125 1,800 2,000 162,000 250,000 10 90 20 1,800 2,000 162,000 40,000 105 2,000 210,000 19 80 2,000 160,000 25 2,000 50,000 28 100 2,200 220,000 25 100 2,000 2,200 50,000 220,000 Sept. 5 25 35 2,000 2,200 50,000 77,000 65 2,200 143,000 16 50 2,200 110,000 15 2,200 33,000 21 180 2,400 432,000 15 180 2,200 2,400 33,000 432,000 28 15 75 2,200 2,400 33,000 180,000 105 2,400 252,000 30 Balances 1,032,500 252,000
2. Accounts Receivable...................................................... 1,675,000 Sales........................................................................... 1,675,000
Cost of Merchandise Sold.............................................. 1,032,500
Merchandise Inventory.............................................. 1,032,500
3. $642,500 ($1,675,000 – $1,032,500)
4. $252,000 (105 units × $2,400)
5. Since the prices rose from $1,500 for the July 3 inventory to $2,400 for the purchase on September 21, we would expect that under last-in, first-out the inventory would be lower.
