Instructions (FILL IN THE BLANKS) The beginning inventory at Funky Party Supplie
ID: 2418239 • Letter: I
Question
Instructions (FILL IN THE BLANKS)
The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows:
Date
Exhibit 4
Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
FIFO
Date
Transaction Number of Units Per Unit Total Jan. 1 Inventory 2,500 $60.00 $150,000 10 Purchase 7,500 68.00 510,000 28 Sale 3,750 120.00 450,000 30 Sale 1,250 120.00 150,000 Feb. 5 Sale 500 120.00 60,000 10 Purchase 18,000 70.00 1,260,000 16 Sale 9,000 125.00 1,125,000 28 Sale 8,500 125.00 1,062,500 Mar. 5 Purchase 15,000 71.60 1,074,000 14 Sale 10,000 125.00 1,250,000 25 Purchase 2,500 72.00 180,000 30 Sale 8,750 125.00 1,093,750 FIFO 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first-in, first-out method. Date Purchases Cost of Merchandise Sold Inventory Quantity Quantity 2016 Jan. 1 10 10 28 28 30 Feb. 5 10 10 16 16 28 Mar. 5 Unit Cost Total Cost Quantity Unit Cost Total Cost Unit Cost Total Cost 2,500 2,500 7,500 S60.00 S60.00 S68.00 S150,000 S150,000 S510,000 7,500 S68.00 S510,000 2,500 S60.00 $150,000 14 14 25 25 30 30 31 BalancesExplanation / Answer
Date Purchases Cost of Merchandise sold Ending Inventory 2016 Quantity Unit cost Total Cost Quantity Unit cost Total cost Quantity Unit cost Total cost Jan-01 2500 60 150000 10 7500 68 510000 2500 60 150000 7500 68 510000 28 2500 60 150000 1250 68 85000 3750 235000 6250 68 425000 30 1250 68 85000 5000 68 340000 Feb-05 500 68 34000 4500 68 306000 10 18000 70 1260000 4500 68 306000 18000 70 1260000 16 4500 68 306000 4500 70 315000 9000 621000 13500 70 945000 28 8500 70 595000 5000 70 350000 Mar-05 15000 71.6 1074000 5000 70 350000 15000 71.6 1074000 Mar-14 5000 70 350000 5000 71.6 358000 10000 708000 10000 71.6 716000 25 2500 72 180000 10000 71.6 716000 2500 72 180000 30 8750 71.6 626500 1250 71.6 89500 2500 72 180000 COGS = 2904500 3750 269500 Sale value of goods Jan-28 Sale 3,750 120 4,50,000 30 Sale 1,250 120 1,50,000 Feb-05 Sale 500 120 60,000 16 Sale 9,000 125 11,25,000 28 Sale 8,500 125 10,62,500 Mar-14 Sale 10,000 125 12,50,000 30 Sale 8,750 125 10,93,750 Total 51,91,250 Sale value of goods 51,91,250 COGS 2904500 Gross Profit 22,86,750 Ending Inventory 1250 71.6 89500 2500 72 180000 3750 269500 Date Account Title Debit Credit Mar-31 Accounts Receivables 5191250 Sales 5191250 Cost of Merchandise sold 2904500 Merchandise Inventory 2904500 Under FIFO, , Stock issues to production& sales are made in first prices so, ending inventory reflect last prices. Under LIFO, , Stock issues to production & sales are made in last prices so, ending inventory reflect previous prices. In the given case prices have increased from $ 60 to $ 72 Hence, we can conclude, that Ending Inventory using LIFO will be lower than the value as per FIFO ( $ 269500)