Question

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 15 units for $20 each.
  

Purchases on December 7	10 units @ $ 6.00 cost
Purchases on December 14	20 units @ $12.00 cost
Purchases on December 21	15 units @ $14.00 cost
Monson sells 15 units for $20 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method.

Answer 1

Weighted average method

	Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	Inventory value	# of units	Cost per unit	Inventory value	# of units	Cost per unit	Inventory value
Dec-07	10	$                    6	$                        60				10	$                           6	$                        60
Dec-14	20	$                  12	$                      240				30		$                      300
Average cost								$300/30 = $10
Dec-15				15	$                  10	$                      150	15	$                        10	$                      150
Dec-21	15	$                  14	$                      210				30		$                      360
Average cost								$360 / 30 = $12
Total						$                      150			$                      360

FIFO Method

	Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	Inventory value	# of units	Cost per unit	Inventory value	# of units	Cost per unit	Inventory value
Dec-07	10	$                    6	$                        60				10	$                    6	$                        60
Dec-14	20	$                  12	$                      240				10	$                    6	$                        60
							20	$                  12	$                      240
Total on Dec 14							30		$                      300
Dec-15				10	$                    6	$                        60
				5	$                  12	$                        60	15	$                  12	$                      180
Dec-21	15	$                  14	$                      210				15	$                  12	$                      180
							15	$                  14	$                      210
Total on Dec 21							30		$                      390