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	10,000	units at $75.00
Mar. 18	Sale	8,000	units
May 2	Purchase	18,000	units at $77.50
Aug. 9	Sale	15,000	units
Oct. 20	Purchase	7,000	units at $80.25

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of goods 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 Goods Sold Weighted Average Cost Flow Method
	Purchases			Cost of Goods 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 goods sold for each sale and the inventory balance after each sale.

	Purchase			Cost of goods sold			Ending inventory
Date	Quantity	Unit cost	Total cost	Quantity	Unit cost	Total cost	Quantity	unit cost	Total cost
Jan 1							10000	75	750000
Mar 18				8000	75	600000	2000	75	150000
May 2	18000	77.50	1395000				20000	77.25	1545000
Aug 9				15000	77.25	1158750	5000	77.25	386250
Oct 20	7000	80.25	561750				12000	79	948000
Dec 31	Balance					1758750			948000