Question

Exercise 6-16

Kaleta Company reports the following for the month of June.

Date	Explanation	Units	Unit Cost	Total Cost
June1	Inventory	358	$6	$2,148
12	Purchase	716	7	5,012
23	Purchase	537	8	4,296
30	Inventory	179

Assume a sale of 788 units occured on June 15 for selling of price $9 and a sale of 644 units on June 27 for $10.

Calculate cost of goods available for sale

The Cost of goods available for sale

$_______________

Calculate Moving-Average unit cost for June 1, 12,15, 23 &27 (Round answers to 3 decimal places, e.g. 2.525.)

June 1	$__________
June 12	$__________
June 15	$_________
June 23	$_________
June 27	$__________

Calulate the 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 788 units occured on June 15 for a selling price of $9 and a sale of 644 units on June 27 for $10. (Round answers to 0 decimal places, e.g. 1,250)

	FIFO	LIFO	Moving-AverageCost
The cost ending inventory	$__________	$________	$
The cost of goods sold	$__________	$________	$

Answer 1

1) The cost of goods available for sale = Cost of Beg Inventory+Purchase on June 12+Purchase on June 23

= $2,148+$5,012+$4,296 = $11,456

2) Calculation of Moving Average Cost per unit (Amounts in $)

Date	Particulars	Units	Balance in units (A)	Cost	Balance in Cost (B)	Moving Average (B/A)
June 1	Inventory	358	358	2,148	2,148	6
June 12	Purchased	716	(358+716) = 1,074	5,012	($2,148+$5,012) = $7,160	6.667
June 15	Sold	788	(1,074-788) = 286	(788*6.667) = 5,253	($7,160-$5,253) = $1,907	6.667
June 23	Purchased	537	(286+537) = 823	4,296	($1,907+$4,296) = $6,203	7.537
June 27	Sold	644	(823-644) = 179	(644*7.537) = 4,854	($6,203-$4,854) = $1,349	7.537

3) FIFO Method

Under FIFO, the ending inventory of 179 units will be from units purchased on June 23 at $8 per unit.

Cost of Ending Inventory = 179 units*$8 = $1,432

Cost of goods sold = (358 units*$6)+(716 units*$7)+[(537-179)*$8]

= $2,148+$5,012+$2,864 = $10,024

LIFO Method

Under LIFO, 788 units sold on June 15 will include 716 units purchased on June 12 and balance 72 units (788-716) from beginning inventory. 644 units sold on June 27 will include 537 units purchased on June 23 and balance 107 units (644-537) from beginning Inventory. Therefore ending inventory of 179 units will be from beginning inventory at $6 per unit.

Cost of Ending Inventory = 179 units*$6 = $1,074

Cost of goods sold = (716 units*$7)+[(72+107) units*$6]+(537 units*$8)

= $5,012+$1,074+$4,296 = $10,382

Moving Average Cost

Cost of Ending Inventory = (179 units*$7.537) = $1,349

Cost of goods sold = Sold on June 15+Sold on June 27

= $5,253+$4,854 = $10,107