Question

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 310 units. Ending inventory at January 31 totals 130 units.

	Units	Unit Cost
Beginning inventory on January 1	280	$	2.60
Purchase on January 9	60		2.80
Purchase on January 25	100		2.94

Required:
Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)

Weighted Average - Perpetual: Goods purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance January 1 280 @ $2.60 = $728.00 January 9 60 @ $2.80 280 @ $2.60 = $728.00 60 @ $2.80 = 168.00 Average cost 340 @ $2.64 $896.00 January 25 100 @ $2.94 340 @ $2.64 = $897.60 100 @ $2.94 = 294.00 Average cost 440 @ $2.71 $1,191.60 January 26 310 @ Totals

Answer 1

Correct Answer:

Weighted Average
Weighted Average	Cost of Goods Available for sale			Cost of goods sold			Ending Inventory
	No. of units	Cost per unit	Cost of goods available for sale	No. of units	Cost per unit	Cost of goods sold	No. of units	Cost per unit	Ending Inventory
01-Jan	280	$                  2.60	$                 728				280	$                       2.60	$                             728
Purchases:
09-Jan	60	$                  2.80	$                 168				340	$                       2.64	$                       897.60
25-Jan	100	$                  2.94	$                 294				440	$                       2.70	$                   1,188.00
26-Jan				310	$             2.70	$                        837	130	$                       2.70	$                       351.00
Total	440		$             1,190	310		$                        837	130	$                       2.70	$                       351.00

Working:

Moving average cost
	Inventory balance	Total cost	Average cost for each units
01-Jan	280	$                  728.00	$              2.60
09-Jan	340	$                  896.00	$              2.64
25-Jan	440	$              1,190.00	$              2.70
26-Jan	130	$                  351.59	$              2.70

End of answer.

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