Question

Q 7.      You are given the following information about Silk Company's inventory for the month of April.

Purchase			Sales
Date	Units	Cost per unit $	Date	Units
April 1	400	4.00	April 2	300
April 10	1,300	4.10	April 11	1,000
April 25	1,200	4.50	April 29	1,400
April 27	600	4.75

Instruction: Silk uses weighted average perpetual. (a). Calculate the cost of ending inventory and cost of goods sold. (Note: Round the weighted average cost per unit to two decimal places.). Show all relevant calculations.                                                                                                                                       Marks: 6

(b). Show the journal entries for the sale on 29 April if the sales price per unit is $7.5. The sales was for cash.

Answer 1

a)	Ending Inventory			$ 3,590.00
	Cost of Goods sold			$ 6,300.00

b)	Journal Entries
	Date	Particulars			Debit	Credit
	29-Apr	Cash			$ 10,500.00
		To Sales				$ 10,500.00
		(1400 x $ 7.5)
	29-Apr	Cost of Goods sold			$   6,300.00
		To Merchandise Inventory				$   6,300.00

Workings:

Using Weighted Average
			Purchases				Cost of Goods Sold				Inventory
Date	Particulars		Units	Rate	Amount		Units	Rate	Amount		Units	Rate	Amount
01-Apr	Purchase		400	$      4.00	$ 1,600.00						400	$      4.00	$ 1,600.00
02-Apr	Sales						300	$      4.00	$ 1,200.00		100	$      4.00	$    400.00
10-Apr	Purchase		1300	$      4.10	$ 5,330.00						1400	$      4.09	$ 5,730.00
11-Apr	Sales						1000	$      4.09	$ 4,090.00		400	$      4.09	$ 1,640.00
25-Apr	Purchase		1200	$      4.50	$ 5,400.00						1600	$      4.40	$ 7,040.00
27-Apr	Purchase		600	$      4.75	$ 2,850.00						2200	$      4.50	$ 9,890.00
29-Apr	Sales						1400	$      4.50	$ 6,300.00		800	$      4.50	$ 3,590.00