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1. FIFO Perpetual Inventory

   The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:

   Date		Transaction	Number of Units		Per Unit		Total
   Apr. 3		Inventory	36		$150		$5,400
   8		Purchase	72		180		12,960
   11		Sale	48		500		24,000
   30		Sale	30		500		15,000
   May 8		Purchase	60		200		12,000
   10		Sale	36		500		18,000
   19		Sale	18		500		9,000
   28		Purchase	60		220		13,200
   June 5		Sale	36		525		18,900
   16		Sale	48		525		25,200
   21		Purchase	108		240		25,920
   28		Sale	54		525		28,350

   Required:

   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. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

   Dunne Co. Schedule of Cost of Merchandise Sold FIFO Method For the three-months ended June 30
   	Purchases			Cost of Merchandise Sold			Inventory
   Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
   Apr. 3								$	$
   Apr. 8		$	$
   Apr. 11					$	$
   Apr. 30
   May 8
   May 10
   May 19
   May 28
   June 5
   June 16
   June 21
   June 28
   June 30	Balances					$			$

   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.

   Record sale	Accounts Receivable Cash Fees Earned Merchandise Inventory Sales
   	Accounts Receivable Cash Fees Earned Merchandise Inventory Sales
   Record cost	Accounts Receivable Cash Cost of Merchandise Sold Sales Merchandise Inventory
   	Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Merchandise Inventory

   3. Determine the gross profit from sales for the period. $

   4. Determine the ending inventory cost as of June 30. $

   5. Based upon the preceding data, would you expect the inventory using the A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.last-in, first-out method to be higher or lower?

   • Higher
   • Lower

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