Question

Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	30,000	units at $30.00
Mar. 18	Sale	24,000	units
May 2	Purchase	54,000	units at $31.00
Aug. 9	Sale	45,000	units
Oct. 20	Purchase	21,000	units at $32.10

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

Schedule of Cost of Merchandise Sold Weighted Average Cost Flow Method
	Purchases			Cost of Merchandise Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1								$	$
Mar. 18					$	$
May 2		$	$
Aug. 9
Oct. 20
Dec. 31	Balances					$		$	$

Answer 1

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale.

Schedule of Cost of Merchandise Sold
Weighted Average Cost Flow Method
	Purchases			Cost of Merchandise Sold			Inventory
Date	Quantity	unit cost	Total cost	Quantity	Unit cost	Total cost	quantity	Unit cost	Total cost
Jan 1							30000	30	900000
Mar 18				24000	30	720000	6000	30	180000
May 2	54000	31	1674000				60000	30.90	1854000
Aug 9				45000	30.90	1390500	15000	30.90	463500
Oct 20	21000	32.10	674100				36000	31.60	1137600
Dec 31	Balances					2110500			1137600