Question

(FIFO,LIFO, and Average Cost Determination) LoBianco Company's record of transactions for the month of April was as follows.

       Purchases:

April 1 (balance on hand) = 600 @ $600

April 4 = 1,500 @ 6.08

April 8 = 800 @ 6.40

April 13 = 1,200 @ 6.50

April 21 = 700 @ 6.60

April 29 = 500 @ 6.79

5,300

Sales:

April 3 = 500 @ $10.00

April 9 = 1,300 @ 10.00

April 11 = 600 @ 11.00

April 23 = 1,200 @ 11.00

Arpil 27 = 900 @ 12.00

4,500

(1) Assuming that perpetual inventory records are kept in both units and dollars, determine the inventory at April 30 using average cost?

Answer 1

Inventory at end of April 30 , 800 unit , with total cost $5334

In Perpetual method of inventory system , inventory are update on realtime basis , ie for every sales , inventory are calculated .

Weighted average method is method in which price per unit is calculated by total cost of inventory available for sales ÷ Total unit available for sales. As perpetual system is followed weighted average cost will be calculated before each sales .

ie (Cost Beginning inventory if any + Total cost Purchases till next sales) ÷ Total unit of inventory available for sales

Date	Transaction	unit	Price per unit	Total	Weighted average cost per unit
1 April	Beginning Inventory	600	$6.00	3600
3April	Sales	(500)	$6.00	(3000)	=3600/600 =$6
	Inventory	100	$6.00	$600
4 April	Purchase	1500	$6.08	$9120
8April	Purchase	800	$6.40	$5120
	Total Inventory	2400		$14840
9April	Sales	(1300)	$6.1833	$(8038)	$14840÷2400 =$6.1833
	Inventory	1100	$6.1833	$6802
11 April	Sales	(600)	$6.1833	$(3710)
	Inventory	500	$6.1833	$3092
13 April	Purchase	1200	$6.50	$7800
21 April	Purchase	700	$6.60	$4620
	Inventory	2400		$15512
23 April	Sales	(1200)	$6.4633	$(7756)	$15512÷2400 =$6.4633
	Inventory	1200	$6.4633	$7756
27 April	Sales	(900)	$6.4633	$(5817)
	Inventory	300	$6.4633	$1939
29 April	Purchase	500	$6.79	$3395
30 April	Ending Inventory	800	$6.6675	$5334	$5334÷800 =$6.6675