Question

The Wright Company recorded the following inventory information during the month of October:

UNITS

UNIT COST

TOTAL COST

UNITS ON HAND

Balance on October 1

2,000

$1.00

$2,000

2,000

Purchased on October 8

1,200

$3.00

$3,600

3,200

Sold on October 20

1,500

1,700

Purchased on October 22

2,000

$4.00

$8,000

3,700

Sold on October 28

2,200

1,500

Purchase on October 29

1,000

$5.00

$5,000

2,500

Part B: Using the partially computed tables on the next three pages, compute the cost of goods sold and the cost of the 2,500 units in ending inventory under each of the assumptions given above.

AVERAGE COSTING – Perpetual

(round cost per unit to four decimal places and total costs to two decimal places)

Date

Purchases

Sales

Inventory on Hand

Units

Cost

Total

Units

Cost

Total

Units

Cost

Total

10/1

2,000

$1.00

$2,000

10/8

Purchased 1,200 units

1,200

$3.00

$3,600

3,200

$1.75

$5,600

10/20

Sold 1,500 units

1,500

$1.75

$2,625

1,700

$1.75

$2,975

10/22

Purchased 2,000 units

10/28

Sold 2,200 units

10/29

Purchased 1,000 units

TOTALS

Answer 1

Solution:

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Oct	2000	$1.0000	$2,000.00	0	$0.0000	$0.00	0	$0.0000	$0.00	2000	$1.0000	$2,000.00
8-Oct	2000	$1.0000	$2,000.00	1200	$3.0000	$3,600.00	0	$0.0000	$0.00	3200	$1.7500	$5,600.00
20-Oct	3200	$1.7500	$5,600.00	0	$0.0000	$0.00	1500	$1.7500	$2,625.00	1700	$1.7500	$2,975.00
22-Oct	1700	$1.7500	$2,975.00	2000	$4.0000	$8,000.00	0	$0.0000	$0.00	3700	$2.9662	$10,975.00
28-Oct	3700	$2.9662	$10,975.00	0	$0.0000	$0.00	2200	$2.9662	$6,525.68	1500	$2.9662	$4,449.32
29-Oct	1500	$2.9662	$4,449.32	1000	$5.0000	$5,000.00	0	$0.0000	$0.00	2500	$3.7797	$9,449.32
Total							3700		$9,150.68	2500		$9,449.32