Question

Pina Colada Corp. uses a perpetual inventory system reports the following for the month of June.

Date		Explanation		Units		Unit Cost		Total Cost
June 1		Inventory		130		$4		$520
12		Purchases		390		5		1,950
23		Purchases		230		6		1,380
30		Inventory		265

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Calculate the average cost per unit, using a perpetual inventory system. Assume a sale of 430 units occurred on June 15 for a selling price of $7 and a sale of 55 units on June 27 for $8. (Round intermediate calculations to 0 decimal places, e.g. 5.250 and final answer to 3 decimal places, e.g. 5.125.)

June 1		$enter a dollar amount
June 12		$enter a dollar amount
June 15		$enter a dollar amount
June 23		$enter a dollar amount
June 27		$enter a dollar amount

  

  

Calculate cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 430 units occurred on June 15 for a selling price of $7 and a sale of 55 units on June 27 for $8. (Round intermediate calculations and final answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		Moving-Average
The cost of the ending inventory		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
The cost of goods sold		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount

Answer 1

Date		Units	Unit cost	Total cost
June 1	Inventory	130	$4	$520
June 12	Purchases	390	$5	1950
June 23	Purchases	230	$6	1380
	Total	750		$3850

Total sales units= 430+55= 485 units

Moving average method

Date	Purchases			Cost of goods sold			Inventory
June 1							130	$4	$520
June 12	390	$5	$1950				130	$4	$520
							390	$5	1950
Average cost							520	(2470/520)= $4.75	$2470
June 15				430	$4.75	$2042.5	90	$4.75	$427.5
June 23	230	$6	$1380				90	$4.75	$427.5
							230	$6	1380
Average cost							320	(1807.5/320)= $5.648	$1807.5
June 27				55	$5.648	$310.64	265	$5.648	$1496.72
Total						$2353.14			$1496.72

June 1	$4
June 12	$4.75
June 15	$4.75
June 23	$5.648
June 27	$5.648

FIFO method

Calculation of Cost of goods sold

Date		Units	Unit cost	Total cost
June 1	Inventory	130	$4	$520
June 12	Purchases (485-130)	355	$5	1775
	Total	485		$2295

Ending inventory= Cost of goods available for sale-Cost of goods sold

= $3850-2295= $1555

LIFO method

Calculation of Cost of goods sold

Date		Units	Unit cost	Total cost
	June 15 sales
June 12	Purchases	390	$5	$1950
June 1	Inventory	40	$4	160
	June 27 sales
June 23	Purchases	55	$6	330
	Total	485		$2440

June 1 sales units= June 15 unit sales-June 12 unit sales

= 430-390= 40 units

Ending inventory= Cost of goods available for sale-Cost of goods sold

= $3850-2440= $1410

	FIFO	LIFO	Moving average
The cost of the ending inventory	$1555	$1410	$1497
The cost of goods sold	$2295	$2440	$2353

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