Question

Problem 6-5A (Part Level Submission) You are provided with the following information for Koetteritz Inc. for the month ended June 30, 2017. Koetteritz uses the periodic method for inventory. Unit Cost or Selling Price Date Quantity $40 June 1 June 4 June 10 June 11 June 18 June 18 June 25 June 28 Description Beginning inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase

Answer 1

Cost of Goods Available For Sale
Date	Description	Quantity	Unit cost	Amount
June 1	Beginning inventory	39	$40	$1,560
June 4	Purchase	137	45	6,165
June 18	Purchase less return	45	47	2,115
June 28	Purchase	27	51	1,377
Total		248		$11,217

Sales = 108-16*$71+67*$75

Sales = $6,532+5,025 = $11,557

Sales in units = 108-16+67 = 159 units

Ending units = 248 - 159 = 89 units

Average cost per unit = $11,217 / 248 = $45.23 per unit

LIFO:

Ending inventory = $1,560 + 2,250 (50*$45) = $3,810

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

Cost of goods sold = $11,217 - 3,810 = $7,407

Gross profit = Sales - Cost of goods sold

Gross profit = $11,557 - 7,407 = $4,150

FIFO:

Ending inventory = $1,377+2,115+765(17*$45) = $4,257

Cost of goods sold = $11,217 - 4,257 = $6,960

Gross profit = $11,557 - 6,960 = $4,597

Average-cost

Ending inventory = 89*$45.23 = $4,025

Cost of goods sold = 159*$45.23 = $7,192

Gross profit = $11,557 - 7,192 = $4,365

2.

Gross profit rate:

LIFO = $4,150 / 11,557 *100 = 35.9%

FIFO = $4,597 / 11,557 *100 = 39.8%

Average cost = $4,365 / 11,557 *100 = 37.8%

3.

In this period of rising prices, LIFO gives the highest cost of goods sold and the lowest gross profit. FIFO gives the lowest cost of goods sold and the highest gross profit