The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

Instructions

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 last-in, first-out method.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost as of March 31.

Answer:

1.

Unit Total Unit Total Unit Total

Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost

 Jan. 17,500 75.00 562,500

10 22,500 85.00 1,912,5007,500 75.00 562,500

22,500 85.00 1,912,500

2811,250 85.00 956,250 7,500 75.00 562,500

11,250 85.00 956,250

303,750 85.00 318,750 7,500 75.00 562,500

7,500 85.00 637,500

 Feb. 51,500 85.00 127,500 7,500 75.00 562,500

6,000 85.00 510,000

10 54,000 87.50 4,725,0007,500 75.00 562,500

6,000 85.00 510,000

54,000 87.50 4,725,000

1627,000 87.50 2,362,500 7,500 75.00 562,500

6,000 85.00 510,000

27,000 87.50 2,362,500

2825,500 87.50 2,231,250 7,500 75.00 562,500

6,000 85.00 510,000

1,500 87.50 131,250

 Mar. 5 45,000 89.50 4,027,5007,500 75.00 562,500

6,000 85.00 510,000

1,500 87.50 131,250

45,000 89.50 4,027,500

1430,000 89.50 2,685,000 7,500 75.00 562,500

6,000 85.00 510,000

1,500 87.50 131,250

15,000 89.50 1,342,500

25 7,500 90.00 675,0007,500 75.00 562,500

6,000 85.00 510,000

1,500 87.50 131,250

15,000 89.50 1,342,500

7,500 90.00 675,000

307,500 90.00 675,000 7,500 75.00 562,500

15,000 89.50 1,342,500 3,750 85.00 318,750

1,500 87.50 131,250

2,250 85.00 191,250

31  Balances11,021,250 881,250

2. Total sales.......................................................................................$19,875,000

Total cost of merchandise sold......................................................... 11,021,250

Gross profit.................................................................................... $ 8,853,750

* Total Sales = $19,875,000 = $1,687,500 + $562,500 + $225,000 + $4,320,000 + $4,080,000 + 

$4,800,000 + $4,200,000

3. $881,250 = [(7,500 units × $75) + (3,750 units × $85)]

= $562,500 + $318,750