Weighted Average Cost Flow Method Under Perpetual Inventory System The following

Question

Weighted Average Cost Flow Method Under Perpetual Inventory System The following units of a particular item were available for sale during the calendar year: Jan. 1 Inventory Mar. 18 Sale May 2 Purchase Aug. 9 Sale Oct. 20 Purchase The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places if necessary. 30,000 units at $30.00 24,000 units 54,000 units at $31.00 45,000 units 21,000 units at $32.10 Schedule of Cost of Merchandise Soled Weighted Average Cost Flow Method Cost of Merchandise Sold Purchases Unit Cost Total Cost Total Cost Quantity Date Quantity Unit Cost an. 1 Mar. 18 May 2

Explanation / Answer

Ans. Purchases Cost of Merchandise sold Inventory Date Quantity Unit cost Total cost Quantity Unit cost Total cost Quantity Unit cost Total cost Jan.1 30000 30 900000 30000 30.00 900000 18-Mar 24000 30 720000 6000 30.00 180000 2-May 54000 31 1674000 60000 30.90 1854000 9-Aug 45000 30.9 1390500 15000 30.90 463500 20-Oct 21000 32.1 674100 36000 31.6 1137600 31-Dec Balances Cost of merch. Sold 2110500 Ending inventory 1137600 Weighted average cost per unit   =   Total cost of inventory / Quantity of inventory Jan.1 30 30 18-Mar (900000-720000) / (30000-24000) 30 2-May (180000+1674000) / (6000+54000) 30.9 9-Aug (60000-45000) / (1854000-1390500) 30.9 20-Oct (463500+674100) / (15000+21000) 31.6 Unit cost of goods sold is same as the unit cost of previous balance.

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