Question

Ferris Company began January with 9,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	6,000		$	9			$	54,000
Jan. 18	9,000			10				90,000
Totals	15,000							144,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	5,000
Jan. 12	3,000
Jan. 20	6,000
Total	14,000

10,000 units were on hand at the end of the month.

rev: 09_24_2019_QC_CS-182166

5. Calculate January's ending inventory and cost of goods sold for the month using Average cost, perpetual system. (Round average cost per unit to 4 decimal places. Enter sales with a negative sign.)
  

Perpetual Average Inventory on hand Cost of Goods Sold # of units Cost per unit Inventory Value # of units sold Avg.Cost per unit Cost of Goods Sold Beginning Inventory 9,000 8.0000 $72,000 Sale - January 5 (5,000) 8.0000 (40,000) 5,000 $8.0000 $40,000 Subtotal Average Cost 4,000 8.0000 32,000 Purchase - January 10 6,000 9.0000 54,000 Subtotal Average Cost 10,000 8.4000 86,000 Sale - January 12 (3,000) 8.4000 (25,200) 3,000 $8.4000 $25,200 Subtotal Average Cost 7,000 60,800 Purchase - January 18 9,000 10.0000 90,000 Subtotal Average Cost 16,000 150,800 Sale - January 20 (6,000) 0 6,000 $0.0000 0 Total 10,000 $150,800 14,000 $65,200

Answer 1

Ans.	Perpetual Average:	Inventory on hand			Cost of goods sold
		Quantity	Cost per unit	Total cost	Quantity	Average cost	Total cost
	Beginning inventory	9000	$8.0000	$72,000
	Sale - January 5	-5000	$8.0000	-$40,000
	Subtotal Average Cost	4000	$8.0000	$32,000	5000	$8.0000	$40,000
	Purchase - January 10	6000	$9.0000	$54,000
	Subtotal Average Cost	10000	$8.6000	$86,000
	Sale - January 12	-3000	$8.6000	-$25,800	3000	$8.6000	$25,800
	Subtotal Average Cost	7000	$8.6000	$60,200
	Purchase - January 18	9000	$10.0000	$90,000
	Subtotal Average Cost	16000	$9.3875	$150,200
	Sale - January 20	-6000	$9.3875	-$56,325	6000	$9.3875	$56,325
	Total	10000	$9.3875	$93,875	14000		$122,125
	Ending Inventory   = $93,875
	Cost of goods sold = $122,125
	*Units are sold on the previous average cost per unit.
	*Average cost per unit = Subtotal cost / Subtotal units.