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a. Determine the total sales and the total cost of merchandisesold for the period. Journalize the entries in the sales and costof merchandise sold accounts. Assume that all sales were onaccount.

b. Determine gross profit from sales for the period

c. determine the ending inventory cost.

d. based upon the preceding data, would you expect the inventoryusing the last in, first out method to be higher or lower.

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The beginning inventory at Funky Party Supplies and data onpurchases and sales for a three-month period ending March 31, 2016,are as follows:

Date		Transaction	Number of Units	PerUnit	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

	Instructions
1.	Record the inventory,purchases, and cost of merchandise sold data in a perpetualinventory record similar to the one illustrated in Exhibit 4, usingthe first-in, first-out method.
2.	Determine the total sales andthe total cost of merchandise sold for the period. Journalize theentries in the sales and cost of merchandise sold accounts. Assumethat all sales were on account and date your journal entry March31. Refer to the Chart of Accounts for exact wording of accounttitles.
3.	Determine the gross profit fromsales for the period.
4.	Determine the ending inventorycost as of March 31, 2016.
5.	Based upon the preceding data,would you expect the inventory using the last-in, first-out methodto be higher or lower?

2. Determine the total sales and the total cost of merchandisesold for the period. Journalize the entries in the sales and costof merchandise sold accounts. Assume that all sales were on accountand date your journal entry March 31. Refer to the Chart ofAccounts for exact wording of account titles.

CHARTOF ACCOUNTS

FunkyParty Supplies

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Office Equipment
192	Accumulated Depreciation-OfficeEquipment
193	Store Equipment
194	Accumulated Depreciation-StoreEquipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
222	Interest Payable
231	Salaries Payable
241	Sales Tax Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

EXPENSES

510

Cost of Merchandise Sold

Office Supplies Expense

Store Supplies Expense

561

Depreciation Expense-OfficeEquipment

562

Depreciation Expense-StoreEquipment

590

Miscellaneous Expense

710

Interest Expense

The beginning inventory at Funky Party Supplies and data onpurchases and sales for a three-month period ending March 31, 2016,are as follows:

Date		Transaction	Number of Units	PerUnit	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

	Instructions
1.	Record the inventory,purchases, and cost of merchandise sold data in a perpetualinventory record similar to the one illustrated in Exhibit 4, usingthe first-in, first-out method.
2.	Determine the total sales andthe total cost of merchandise sold for the period. Journalize theentries in the sales and cost of merchandise sold accounts. Assumethat all sales were on account and date your journal entry March31. Refer to the Chart of Accounts for exact wording of accounttitles.
3.	Determine the gross profit fromsales for the period.
4.	Determine the ending inventorycost as of March 31, 2016.
5.	Based upon the preceding data,would you expect the inventory using the last-in, first-out methodto be higher or lower?

FIFO

1. Record the inventory, purchases, and cost of merchandise solddata in a perpetual inventory record similar to the one illustratedin Exhibit 4, using the first-in, first-out method.

Date	Purchases			Cost of MerchandiseSold			Inventory
2016	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1
10
10
28
28
30
Feb. 5
10
10
16
16
28
Mar. 5
5
14
14
25
25
30
30
31	Balances

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST.REF.	DEBIT	CREDIT
1
2
3
4

rubyreindeer792

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable DVD players are as follows: Apr. 1 Inventory 36 units @ $45 10 Sale 30 units 15 Purchase 17 units @ $47 20 Sale 12 units 24 Sale 8 units 30 Purchase 40 units @ $49 The business maintains a perpetual inventory system, costing by the first-in, first-out method. 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. a. 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. Cost of the Merchandise Sold Schedule First-in, First-out Method Portable DVD Players Date Quantity Purchased Purchases Unit Cost Purchases Total Cost Quantity Sold Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Quantity Inventory Unit Cost Inventory Total Cost Apr. 1 $ $ Apr. 10 $ $ Apr. 15 $ $ Apr. 20 Apr. 24 Apr. 30 Apr. 30 Balances $ $ b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

Perpetual Inventory Using FIFO

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

Apr. 1	Inventory	36 units @ $45
10	Sale	30 units
15	Purchase	17 units @ $47
20	Sale	12 units
24	Sale	8 units
30	Purchase	40 units @ $49

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

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.

a. 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.

Cost of the Merchandise Sold Schedule
First-in, First-out Method
Portable DVD Players
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
Apr. 1								$	$
Apr. 10					$	$
Apr. 15		$	$

Apr. 20

Apr. 24
Apr. 30

Apr. 30	Balances					$			$

b. Based upon the preceding data, would you expect the inventory to be higher or lower using the last-in, first-out method?

Periodic Inventory by Three Methods

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date	Transaction	Number of Units	Per Unit	Total
Jan. 1	Inventory	7,500	$75.00	$562,500
10	Purchase	22,500	85.00	1,912,500
28	Sale	11,250	150.00	1,687,500
30	Sale	3,750	150.00	562,500
Feb. 5	Sale	1,500	150.00	225,000
10	Purchase	54,000	87.50	4,725,000
16	Sale	27,000	160.00	4,320,000
28	Sale	25,500	160.00	4,080,000
Mar. 5	Purchase	45,000	89.50	4,027,500
14	Sale	30,000	160.00	4,800,000
25	Purchase	7,500	90.00	675,000
30	Sale	26,250	160.00	4,200,000

Required:

1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

2. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

3. Determine the inventory on March 31 and the cost of merchandise sold for the three month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and final answers to the nearest dollar.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive numbers.

	FIFO	LIFO	Weighted Average
Sales	$	$	$
Cost of merchandise sold
Gross profit	$	$	$
Inventory, March 31	$	$	$

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