Question

Sheridan Company has the following inventory data:

July 1		Beginning inventory		40 units at $17		$680
7		Purchases		180 units at $18		3240
22		Purchases		10 units at $22		220
						$4140

A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the average cost method, the value of ending inventory (rounded to whole dollar) is

Answer 1

ANSWER- for valuation of closing inventory AVERAGE COST METHOD FORMULA

= Total inventory cost ÷ total unit

= ( $680 + $3240 + $220 ) ÷ ( 40 + 180 + 10 )

= ( $4140 ) ÷ ( 230 )

= $ 18 per unit average cost

in the given question , a physical count of merchandise inventory on july 30 reveals that there are 50 UNIT on hand .

so ,total value of inventory in hand at the date of 30 july is

​​​​​​ "value of inventory = inventory in hand × average cost per unit" .

= 50 unit × $ 18

= $ 900

so value of inventory at the date 30 july is $ 900