Question

Ferris Company began January with 6,000 units of its principal product. The cost of each unit is $9. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	5,000		$	10			$	50,000
Jan. 18	6,000			11				66,000
Totals	11,000							116,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	3,000
Jan. 12	2,000
Jan. 20	4,000
Total	9,000

8,000 units were on hand at the end of the month.

5. Calculate January's ending inventory and cost of goods sold for the month using Average cost, perpetual system. (Round average cost per unit to 4 decimal places. Enter sales with a negative sign.)

Answer 1

Answer- 5)- Cost of goods sold using Average cost= $87500.

Ending inventory using Average cost = $82500.

Explanation-

Average cost Method
Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Jan-01						6000	9.00	54000
Jan-05			3000	9.00	27000	3000	9.00	27000
Jan-10	5000	10.00				3000	9.00	27000
						5000	10.00	50000
Average Cost						8000	9.6250	77000
Jan-12			2000	9.6250	19250	6000	9.6250	57750
Jan-18	6000	11.00				6000	9.6250	57750
						6000	11	66000
Average Cost						12000	10.3125	123750
Jan-20			4000	10.3125	41250	8000	10.3125	82500
Totals			9000		87500	8000		82500