Question

Weighted Average Cost Method >with Perpetual Inventory

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Apr. 3		Inventory	25		$1,200		$30,000
8		Purchase	75		1,240		93,000
11		Sale	40		2,000		80,000
30		Sale	30		2,000		60,000
May 8		Purchase	60		1,260		75,600
10		Sale	50		2,000		100,000
19		Sale	20		2,000		40,000
28		Purchase	80		1,260		100,800
June 5		Sale	40		2,250		90,000
16		Sale	25		2,250		56,250
21		Purchase	35		1,264		44,240
28		Sale	44		2,250		99,000

Required:

1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

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

3. Determine the ending inventory cost on June 30.

Answer 1

1)

	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
3-Apr							25	1200	30000
8-Apr	75	1240	93000				25	1200	30000
							75	1240	93000
11-Apr				40	1230	49200	60	1230	73800
30-Apr				30	1230	36900	30	1230	36900
8-May	60	1260	75600				30	1230	36900
							60	1260	75600
10-May				50	1250	62500	40	1250	50000
19-May				20	1250	25000	20	1250	25000
28-May	80	1260	100800				20	1250	25000
							80	1260	100800
5-Jun				40	1258	50320	60	1258	75480
16-Jun				25	1258	31450	35	1258	44030
21-Jun	35	1264	44240				35	1258	44030
							35	1264	44240
28-Jun				44	1261	55484	26	1261	32786

Unit cost of sales on 11 April and 30 April = (30000+ 93000)/100 = 1230

Unit cost of sales on 10 May and 19 May = (36900+ 75600)/90 = 1250

Unit cost of sales on 5 June and 16 June = (25000+ 100800)/100 = 1258

Unit cost of sales on 28 June = (44030+ 44240)/70 = 1261

2)

Sales [140 units *2000 +65units*2250+44units*2250]	525250
Less : Cost of goods sold [From above table,total]	310854
Gross Profit	214396

3) Ending Inventory = 26 units at the rate of 1261 and total cost of 32786.