Dollar Bookstore has the following information about its inventory of intermedia

Question

Dollar Bookstore has the following information about its inventory of intermediate accounting textbook: Beginning inventory of 2018: 1 book @$60 The following transactions took place in year 2018: Jan. 2018: purchase 2 books at $55 each Mar. 2018: Purchase 2 books at $50 each June. 2018: Sold 3 books at $80 each Sep. 2018: Purchase 1 book at $65. Assuming that Penny Bookstore uses a periodic system. What are the COGS and ending inventory recorded on 12/31/2018 if the average-cost inventory flow assumption is used?

$162 and $167

$167.5 and $167.5

$162 and $173

$55.83 and $279.2

Explanation / Answer

Date Units Unit cost Total Beg. Inv. 1 60 60 18-Jan 2 55 110 18-Mar 2 50 100 18-Sep 1 65 65 Total 6 335 Average cost = 335/6= $55.83 COGS = 3*55.83 = $167.5 Ending inventory = 3*55.8 = $167.5 Option 2 is correct

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