Question

Priscilla has the following inventory information.

July 1 Beginning Inventory       20 units at $19 $ 380
       7 Purchases                     70 units at $20 1,400
     22 Purchases                      10 units at $23   230
                                                                   $2,010

A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Cost of goods sold (rounded to the nearest dollar) under the average-cost method is

A. 1740

B.1772

C.1778

D. 1794

Answer 1

Ans.	The given options are not correct.
	Correct answer would be $201.
	Average cost:	Cost of goods available for sale
		Units	Rate	Total
	Beginning inventory	20	$19.00	$380
	Purchases:
	10-Jan	70	$20.00	$1,400
	18-Jan	10	$23.00	$230
	Total	100		$2,010
	Average cost per unit =   Total cost of goods available for sale / Units available for sale
		$2,010 / 100
		$20.10
	Number of units sold = Units available for sale - Ending inventory units
		100 - 90
		10   units
	Cost of goods sold   =   Number of units sold * Average cost per unit
		10 * $20.10
		$201