Question

Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	30,000	units at $30.00
Mar. 18	Sale	24,000	units
May 2	Purchase	54,000	units at $31.00
Aug. 9	Sale	45,000	units
Oct. 20	Purchase	21,000	units at $32.10

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

Answer 1

Ans.	Weighted Average :
		Goods Purchased	Cost of goods sold	Inventory Balance
	Date	# of Units	Cost per unit	Inventory value	# of units sold	Cost per unit	Cost of goods sold	# of Units	Cost per unit	Inventory Balance
	01-Jan							30000	$30.00	$900,000
	18-Mar				24000	$30.00	$720,000	6000	$30.00	$180,000
	02-May	54000	$31.00	$1,674,000				60000	$30.90	$1,854,000
	09-Aug				45000	$30.90	$1,390,500	15000	$30.00	$463,500
	20-Oct	21000	$32.10	$674,100				36000	$31.60	$1,137,600
	Total				Cost of goods sold		$2,110,500	Ending inventory	$1,137,600
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).
	*All purchases are added in inventory balance and a new cost per unit is calculated.
	*Sales are made on the unit cost of inventory balance on previous date.