Question

montate ending Inventory Overstate beginning inventory Overstate ending inventory Cost per un 112 6. During January, a company na ary. a company that uses a perpetual inventory system had begu purchases, and sales as follows: Date Item Units Beginning inventory 100 50 Jan 5 Sale Jan 10 Purchase 25 Jan 15 Sale 35 Sale Jan 25 16 70 Prepare a schedule to show the cost of goods sold and ending inventory using the mos average method of costing rounding calculations to two decimals.

Answer 1

Under moving average method, cost of inventory is re-calculated every time a new purchase is made by adding total cost of goods in hand including new purchases and dividing the total by the no. of units in hand.

		Units	Rate per unit(total value/units)	Total Value
A.	opening stock	100	12	1200
B.	less: Sale	50	12	600
C.	Balance	50	12	600
D.	Add:Purchases	70	16	1120
E.	Balance	120	14.33 this will be the new per unit cost	1720
F.	less: Sale	25	14.33	358.33
G.	Balance	95	14.33	1361.67
H.	less: Sale	35	14.33	501.67
I.	Balance	60	14.33	860.00

Therefore cost of goods sold:

50 units @12 =600

25 units @14.33= 358.33

35 units @14.33= 501.67

= $1460

ending inventory= 60 units @14.33 = $860