Question

Empire Stores experienced a computer malfunction that accidently wiped out some of the inventory details for the month of January. Management was able to partially reconstruct the following spreadsheet for the month of January inventory transactions: Empire uses the perpetual inventory system and the weighted average cost flow assumption for valuing inventory. All units sold in January were priced at $72.00/unit.

(a) Your answer is correct. Calculate amounts for (a) through (p) to Assist Empire’s management by completing the table. (Round calculations for cost per unit to 4 decimal places, e.g. 10.5264 and other answers to 0 decimal places, e.g. 61,052.) Date Units Cost/Unit Amount COGS Sales Jan 1 Beginnig Inventory 8,100 $26.70 $216,270 3 Sale (7,300 ) $ (a) $ (b) (c) $26.70 $ (d) 13 Purchase 4,300 $29.10 $125,130 5,100 $ (e) $146,490 17 Purchase 700 $34.10 $23,870 5,800 $ (f) $170,360 27 Sale (3,600 ) $ (g) $ (h) 2,200 $29.3724 $64,619 29 Purchase (i) $36.50 $91,250 4,700 $ (j) $155,869 31 Sale (k) $ (l) $ (m) 1,800 $33.1639 $ (n) Totals $ (o) $ (p) SHOW SOLUTION LINK TO TEXT LINK TO TEXT Attempts: 1 of 2 used

(b) Using the information in the completed table. (Round calculations for cost per unit to 4 decimal places, e.g. 10.5264 and other answers to 0 decimal places, e.g. 61,052.) i. Determine the weighted average cost of goods sold. ii. Determine the ending inventory. iii. Determine the gross margin. Weighted average cost of goods sold $ Ending inventory $ Gross margin $

Answer 1

(a)
	a)	COGS=Units sold*Cost/unit on Jan 1=7300*26.70=$ 194910
	b)	Sales=Units sold*selling price=7300*72=$ 525600
	c)	Units in inventory as on Jan 3=Beginning inventory-Units sold=8100-7300=800 units
	d)	Amount of inventory=Units in inventory as on Jan 3*Cost/unit=800*26.70=$ 21360
	e)	Cost/unit=Amount/units=146490/5100=$ 28.7235
	f)	Cost/unit=Amount/units=170360/5800=$ 29.3724
	g)	COGS=Units sold*Cost/unit on Jan 17=3600*29.3724=$ 105741
	h)	Sales=Units sold*selling price=3600*72=$ 259200
	i)	Units purchased=Amount/Cost per unit=91250/36.50=2500
	j)	Cost/unit=Amount/units=155869/4700=$ 33.1639
	k)	Units sold=Units in inventory on Jan 29-Units in inventory on Jan 31=4700-1800=2900
	l)	COGS=Units sold*Cost/unit on Jan 17=2900*33.1639=$ 96175
	m)	Sales=Units sold*selling price=2900*72=$ 208800
	n)	Amount=Unit*cost/unit=1800*33.1639=$ 59695
	o)	Total COGS=$ 396826
	p)	Total sales=$ 993600
	Let's fill the table to find O and P
	Date				Units	Cost/unit	Amount	COGS	Sales
	Jan 1.	Beginning inventory			8100	26.7	216270
	3	Sale			-7300			194910	525600
					800	26.7	21360
	13	Purchase			4300	29.1	125130
					5100	28.7235	146490
	17	Purchase			700	34.1	23870
					5800	29.3724	170360
	27	Sale			-3600			105741	259200
					2200	29.3724	64619
	29	Purchase			2500	36.5	91250
					4700	33.1639	155869
	31	Sale			-2900			96175	208800
					1800	33.1639	59695
		Totals						396826	993600
(b)	Weighted average cost of goods sold=Total COGS=$ 396826
	Ending inventory=amount as on Jan 31=$ 59695
	Gross margin=Total sales-Total COGS=993600-396826=$ 596774
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