Inventory Costing: Average Cost Bordeaux Company has the following information r

Question

Inventory Costing: Average Cost

Bordeaux Company has the following information related to purchases and sales of one of its inventory items:

Assume that Bordeaux uses a perpetual inventory system.

Required:

Calculate the cost of goods sold and the cost of ending inventory using the average cost method. (Use four decimal places for per unit calculations and round all other numbers to the nearest dollar.)

Date Description Units Purchased at Cost Units Sold at Retail June 1 Beginning Inventory 150 units @ $10 = $1,500 9 Purchase 1 200 units @ $12 = $2,400 14 Sale 1 300 units @ $25 22 Purchase 2 250 units @ $14 = $3,500 29 Sale 2 240 units @ $25

Explanation / Answer

In perpetual inventory system the cost of goods and ending inventory is calculated by determining balance inventory after every transaction of purchase or sale. The cost of goods sold and ending inventory using Average cost method for the month of June is as follows:

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