Question

ABC Corp. had the following inventory transactions for the month of December 20X5:

Date	Transaction type	Amount (units)	Price per unit
Dec. 1	Opening balance	400	$5.12
Dec. 3	Purchase	1,100	$5.23
Dec. 15	Purchase	900	$5.48
Dec. 22	Purchase	250	$5.66
Dec. 2	Sale	300	$6.50
Dec. 6	Sale	800	$6.50
Dec. 18	Sale	700	$8.00
Dec. 25	Sale	150	$8.00

What is the value of the inventory held by ABC as at December 31, 20X5, if the company values its inventory using the weighted average cost formula and uses a perpetual inventory system?
Round all calculations to two significant decimal places, for example, $5.66

a) $3,735
b) $3,834
c) $3,881
d) $10,314

Answer 1

STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
01-Dec							400	5.12	2048
02-Dec				300	5.12	1536	100	5.12	512
03-Dec	1100	5.23	5753				100	5.12	512
							1100	5.23	5753
AVERAGE							1200	5.22	6265
06-Dec				800	5.22	4176	400	5.22	2089
15-Dec	900	5.48	4932				400	5.22	2089
							900	5.48	4932
Average							1300	5.4	7021
18-Dec				700	5.4	3780	600	5.4	3241
22-Dec	250	5.66	1415				600	5.4	3241
							250	5.66	1415
Average							850	5.48	4656
Dec-25				150	5.48	822	700	5.48	3834
TOTAL	2250		12100	1950		10314	700	5.48	3834
Answer is b. $ 3834.