Question

Question:

A perpetual Inventory System is used by Black Hawk, Inc. The following transactions show beginning inventory, purchases and sales of CT-300, a cellular telephone for the month of May:

May   1: Balance on hand, 20 units, cost $50 each          $1000

May   5: Sale, 10 units, sale price $80 each                    $ 800

May   6: Purchase, 20 units, cost $60 each                      $1200

May 21: Sale, 15 units, Sale Price $100 each                  $1500

Instruction:

Record beginning inventory, purchases, cost of goods sold, and running balance on an inventory subsidiary record using the Average Cost method.

Answer 1

Average Cost Method

	Available for sale			Cost of goods sold			Ending Inventory
Date	Units	Unit cost	Total Cost	Units	Unit cost	Total Cost	Units	Unit Cost	Total Cost
May-01							20	50	1,000
May-05				10	50	500	10	50	500
May-06	20	60	1,200				30	56.67	1,700
May-21				15	56.67	850	15	56.67	850
Total				25		1,350	15		850

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