Question

Perpetual Inventory Using FIFO

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

Inventory		Purchases		Sales
July 1	4,100 units at $26	July 10	2,050 units at $28	July 12	2,870 units
		July 20	1,845 units at $30	July 14	2,460 units
				July 31	1,230 units

Assuming that the perpetual inventory system is used, costing by the FIFO method, determine the cost of the merchandise sold for each sale and the inventory balance after each sale.

Schedule of Cost of Merchandise Sold
FIFO Method
Prepaid Cell Phones
Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
July 1							4100	$26	$106600
July 10		$	$
July 12					$	$
July 14
July 20
July 31
July 31	Balances					$			$

Answer 1

FIFO METHOD is first in first out. Meaning the goods acquired earlier are deemed to be sold first and inventory will have latest purchase goods.

perpetual system calculates inventory after each transactions and not after specific period like month or year.

date	purchase			cost of goods sold			inventory
	quanity	unit cost	Total cost	quanitty	unit cost	Total cost	quantity	unit cost	total cost
July 1							4100	$26	$106600[4100*$26]
July 10	2050	$28	$57400 [2050*$28]				4100 2050	$26 $28	106600 [4100*26] $57400 [2050*28]
July 12				2870	$26	74620	[4100-2870sold]1230 2050	$26 $28	$31980 $57400
July 14				1230 1230[2460-1230	$26 $28	31980 34440	820[2050-1230]	$28	$22960
July 20	1845	30	55350 [1845*30]				820 1845	$28 $30	$22960 $55350
July 31				820 410[1230-820]	$28 $30	22960 12300	1435[1845-410]	$30	$43050
Total				112750			176300
Balance JULY 31									$43050