Question

Problem 5-1A Perpetual: Alternative cost flows LO P1

[The following information applies to the questions displayed below.]

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Mar.

1

Beginning inventory

70

units

@ $50.40 per unit

Mar.

5

Purchase

210

units

@ $55.40 per unit

Mar.

9

Sales

230

units

@ $85.40 per unit

Mar.

18

Purchase

70

units

@ $60.40 per unit

Mar.

25

Purchase

120

units

@ $62.40 per unit

Mar.

29

Sales

100

units

@ $95.40 per unit

Totals

470

units

330

units

1. Compute cost of goods available for sale and the number of units available for sale.

	Cost of Goods Available for Sale
	# of units	Cost per Unit	Cost of Goods Available for Sale
Beginning inventory
Purchases:
March 5
March 18
March 25
Total

Compute the number of units in ending inventory.

Ending inventory

units

Answer 1

Calculation of cost of goods available for sale :
	Number of units available for sale	Cost per unit	Cost of goods available for sale
Beginning inventory	70	50.40	3528
Purchases :
0 March 5	210	55.40	11634
0 March 18	70	60.40	4228
0 March 25	120	62.40	7488
Total	470		26878

Total units sold = 230 + 100	330	units
Ending inventory = Number of units available for sale - Total units sold = 470 - 330	140	units