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: Number Per Transaction of Units Unit Total Date $ 30,000 25 $1,200 Apr. 3 Inventory Purchase 93,000 75 1,240 Sale 11 40 2,000 80,000 Sale 30 30 2,000 60,000 Purchase 1,260 May 8 60 75,600 Sale 10 50 2,000 100,000 Sale 19 20 2,000 40,000 Purchase 28 80 1,260 100,800 Sale 2,250 June 5 40 90,000 Sale 16 25 2,250 56,250 Purchase 21 35 1,264 44,240 Sale 2,250 28 44 99,000 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. Jour- nalize 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 on June 30. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
Number
Per
Transaction
of Units
Unit
Total
Date
$ 30,000
25
$1,200
Apr. 3 Inventory
Purchase
93,000
75
1,240
Sale
11
40
2,000
80,000
Sale
30
30
2,000
60,000
Purchase
1,260
May 8
60
75,600
Sale
10
50
2,000
100,000
Sale
19
20
2,000
40,000
Purchase
28
80
1,260
100,800
Sale
2,250
June 5
40
90,000
Sale
16
25
2,250
56,250
Purchase
21
35
1,264
44,240
Sale
2,250
28
44
99,000
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. Jour-
nalize 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 on June 30.
5. Based upon the preceding data, would you expect the inventory using the last-in,
first-out method to be higher or lower?
Transcribed Image Text: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: Number Per Transaction of Units Unit Total Date $ 30,000 25 $1,200 Apr. 3 Inventory Purchase 93,000 75 1,240 Sale 11 40 2,000 80,000 Sale 30 30 2,000 60,000 Purchase 1,260 May 8 60 75,600 Sale 10 50 2,000 100,000 Sale 19 20 2,000 40,000 Purchase 28 80 1,260 100,800 Sale 2,250 June 5 40 90,000 Sale 16 25 2,250 56,250 Purchase 21 35 1,264 44,240 Sale 2,250 28 44 99,000 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. Jour- nalize 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 on June 30. 5. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower?
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