Question

Use the data provided in P2 but assume that the company uses the periodic inventory system. P2 the inventory of Wood4Fun and data on purchases and sales for a two-month period follow.The company does its books at the end of each month It uses the periodic inventory system.Data is as follows, The proble is for P3. page 294. Needles & Powers ( Perpetual Inventory system and Inventory costing Methods. )Use the data as follows but assume that the company uses the perpetual inventory system. I think this is what is messing me up? Do we run a balance of enventory after each transaction?

Apr 1 Beginning inventory 50 units @ $204

Apri 10 Purchase             100 units @ $220

April 17 sale                    90 units

April 30 Ending inventory   60 units

May 2 Purchase 100 units @ 216

May 14 Purchase 50 units @ $224

May 22 Purchase 60 units @ $ 234

May 30 sale     200 units

May 31 Ending inventory    70 units

Answer 1

For easy calculation we should run an inventory balance after every transaction. I have solved using the average cost method. Hope it helps you.

Average-cost method:

	Units	Unit Cost	Total
April
Beginning inventory (Apr 1)	50	204	10,200
Purchases (Apr 10)	100	220	22,000
Total	150		32,200
Average cost = 32 200 / 150 = 214.67
Sales - COGS (Apr 17)	90	214.67	19,320
Ending inventory (Apr 30)	60	214.67	12,880
Total	150		32,200
May
Beginning inventory (May 1)	60	214.67	12,880
Purchases (May 2)	100	216	21,600
Purchases (May 14)	50	224	11,200
Purchases (May 22)	60	234	14,040
Total	270		59,720
Average cost = 59 720 / 270 = 221.19
Sales - COGS (May 30)	200	221.19	44,237
Ending inventory (May 31)	70	221.19	15,483
Total	270		59,720