Question

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory   250 $10 $ 2,500 April 15 purchase   400  12   4,800 April 23 purchase   350  13   4,550 1,000 $11,850 Compute the April 30 inventory and the April cost of goods sold using the average-cost method.

Answer 1

Inventory                         [Refer working note 2]	$4,740
Cost of Goods Sold        [Refer working note 3]	$7,110

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Working note 1 - Computation average cost per unit under Periodic inventory system
a. Cost of Goods Available for sale         [Cost of beginning inventory + Cost of all purchases]	$11,850
b. Cost of Goods Available for sale         [No. of units in beginning inventory + Total number of units purchased]	1000
Average cost per unit    (a / b)	$11.85

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Working note 2 - Computation of Ending inventory
a. Total number of units available for sale	1000
b. Number of units sold	600
c. Number of units in ending inventory    [a - b]	400
d. Average cost per unit                          [Refer working note 1]	$11.85
Ending inventory (in dollars)                [c x d]	$4,740

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Working note 3 - Computation of Cost of Goods Sold
a. Number of units sold	600
b. Average cost per unit    [Refer working note 1]	$11.85
Cost of Goods Sold        (a x b)	$7,110