Question

Weighted Average Cost Method with Perpetual Inventory

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Jan. 1		Inventory	7,500		$75.00		$562,500
10		Purchase	22,500		85.00		1,912,500
28		Sale	11,250		150.00		1,687,500
30		Sale	3,750		150.00		562,500
Feb. 5		Sale	1,500		150.00		225,000
10		Purchase	54,000		87.50		4,725,000
16		Sale	27,000		160.00		4,320,000
28		Sale	25,500		160.00		4,080,000
Mar. 5		Purchase	45,000		89.50		4,027,500
14		Sale	30,000		160.00		4,800,000
25		Purchase	7,500		90.00		675,000
30		Sale	26,250		160.00		4,200,000

Required:

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method. Round unit cost to two decimal places, if necessary.

Midnight Supplies Perpetual Inventory Account Weighted Average Cost Method For the three months ended March 31
	Purchases			Cost of Merchandise Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1							fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Jan. 10	fill in the blank 4	$fill in the blank 5	$fill in the blank 6				fill in the blank 7	fill in the blank 8	fill in the blank 9
Jan. 28				fill in the blank 10	$fill in the blank 11	$fill in the blank 12	fill in the blank 13	fill in the blank 14	fill in the blank 15
Jan. 30				fill in the blank 16	fill in the blank 17	fill in the blank 18	fill in the blank 19	fill in the blank 20	fill in the blank 21
Feb. 5				fill in the blank 22	fill in the blank 23	fill in the blank 24	fill in the blank 25	fill in the blank 26	fill in the blank 27
Feb. 10	fill in the blank 28	fill in the blank 29	fill in the blank 30				fill in the blank 31	fill in the blank 32	fill in the blank 33
Feb. 16				fill in the blank 34	fill in the blank 35	fill in the blank 36	fill in the blank 37	fill in the blank 38	fill in the blank 39
Feb. 28				fill in the blank 40	fill in the blank 41	fill in the blank 42	fill in the blank 43	fill in the blank 44	fill in the blank 45
Mar. 5	fill in the blank 46	fill in the blank 47	fill in the blank 48				fill in the blank 49	fill in the blank 50	fill in the blank 51
Mar. 14				fill in the blank 52	fill in the blank 53	fill in the blank 54	fill in the blank 55	fill in the blank 56	fill in the blank 57
Mar. 25	fill in the blank 58	fill in the blank 59	fill in the blank 60				fill in the blank 61	fill in the blank 62	fill in the blank 63
Mar. 30				fill in the blank 64	fill in the blank 65	fill in the blank 66	fill in the blank 67	fill in the blank 68	fill in the blank 69
Mar. 31	Balances					$fill in the blank 70			$fill in the blank 71

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

Total sales	$fill in the blank 72
Total cost of merchandise sold	$fill in the blank 73
Gross profit from sales	$fill in the blank 74

3. Determine the ending inventory cost as of March 31.
$fill in the blank 75

Feedback

1. When the perpetual inventory system is used, revenue is recorded each time a sale is made along with an entry to record the cost of the merchandise sold. Under the weighted average method the average unit cost must be determined after each purchase by dividing the total of cost of merchandise on hand by the total units on hand. The cost of merchandise sold is computed by multiplying the average unit cost on the date of sales by the units sold. The inventory balance after a sale is computed by multiplying the average unit cost by the units on hand.

2. Total sales are obtained by taking the number of units sold times their sale prices for all sales and adding these amounts together. The total cost of merchandise sold can be obtained by adding the costs in the perpetual inventory record. Sales minus cost of merchandise sold equals gross profit.

3. The ending inventory cost can be taken from the perpetual inventory record in Part (1).

Inventory
					Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1							fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Jan. 10	fill in the blank 4	$fill in the blank 5	$fill in the blank 6				fill in the blank 7	fill in the blank 8	fill in the blank 9
Jan. 28				fill in the blank 10	$fill in the blank 11	$fill in the blank 12	fill in the blank 13	fill in the blank 14	fill in the blank 15
Jan. 30				fill in the blank 16	fill in the blank 17	fill in the blank 18	fill in the blank 19	fill in the blank 20	fill in the blank 21
Feb. 5				fill in the blank 22	fill in the blank 23	fill in the blank 24	fill in the blank 25	fill in the blank 26	fill in the blank 27
Feb. 10	fill in the blank 28	fill in the blank 29	fill in the blank 30				fill in the blank 31	fill in the blank 32	fill in the blank 33
Feb. 16				fill in the blank 34	fill in the blank 35	fill in the blank 36	fill in the blank 37	fill in the blank 38	fill in the blank 39
Feb. 28				fill in the blank 40	fill in the blank 41	fill in the blank 42	fill in the blank 43	fill in the blank 44	fill in the blank 45
Mar. 5	fill in the blank 46	fill in the blank 47	fill in the blank 48				fill in the blank 49	fill in the blank 50	fill in the blank 51
Mar. 14				fill in the blank 52	fill in the blank 53	fill in the blank 54	fill in the blank 55	fill in the blank 56	fill in the blank 57
Mar. 25	fill in the blank 58	fill in the blank 59	fill in the blank 60				fill in the blank 61	fill in the blank 62	fill in the blank 63
Mar. 30				fill in the blank 64	fill in the blank 65	fill in the blank 66	fill in the blank 67	fill in the blank 68	fill in the blank 69
Mar. 31	Balances					$fill in the blank 70			$fill in the blank 71

Answer 1